ITTEHAD CHEMICALS LIMITEDITTEHAD CHEMICALS LIMITED

ANNUAL REPORT

2015

ANNUAL REPORT

FOR THE YEAR ENDED

JUNE 30, 2015

ITTEHAD CHEMICALS LIMITED

Corporate Information

Vision & Mission Statement

Notice of Annual General Meeting

Directors' Report

Operating & Financial Highlights

Statement of Value Added

Statement of Compliance with the Code of Corporate Governance

Review Report to the Members on the Statement of Compliance withthe Code of Corporate Governance

Auditors' Report to the Members

Balance Sheet

Profit and Loss Account

Statement of Comprehensive Income

Cash Flow Statement

Statement of Changes in Equity

Notes to the Financial Statements

Pattern of Shareholding

Form of Proxy

2

3

4

6

13

14

15

18

20

21

22

23

24

25

26

65

69

Contents

AN

NU

AL R

EP

OR

T

01

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Board of Directors Mr. Muhammad Siddique Khatri Chairman Non-Executive DirectorMr. Abdul Sattar Khatri Director/CEO Executive DirectorMr. Abdul Ghafoor Khatri Director Non-Executive DirectorMs. Farhana Abdul Sattar Khatri Director Non-Executive DirectorMr. Waqas Siddiq Khatri Director Executive DirectorMr. Ahmed Mustafa Director Non-Executive DirectorMr. Pervaiz Ahmad Khan Director Independent Director

Audit Committee Mr. Ahmed Mustafa ChairmanMr. Abdul Ghafoor Khatri MemberMr. Pervaiz Ahmad Khan Member

HR & Remuneration Mr. Abdul Ghafoor Khatri ChairmanCommittee Mr. Ahmed Mustafa Member

Mr. Waqas Siddiq Khatri Member

Chief Financial Officer Mr. Javed Iqbal

Company Secretary Mr. Abdul Mansoor Khan

Registered Office / 39-Empress Road, P.O. Box 1414, Lahore-54000Head Office Tel: 042 - 36306586 - 88, Fax: 042 - 36365697

Website: www.ittehadchemicals.com, E-mail: info@ittehadchemicals.com

Plant G.T. Road, Kala Shah Kaku, District SheikhupuraPh: 042 - 37950222-25, Fax: 042 - 37950206

Shares Registrar M/s. Corplink (Pvt.) LimitedCorporate and Financial ConsultantsWings Arcade, 1-K Commercial, Model Town, LahorePh: 042 - 35839182, Fax: 042 -35869037

Bankers Askari Bank LimitedAllied Bank LimitedAl-Baraka Bank (Pakistan) LimitedBurj Bank LimitedDubai Islamic BankFaysal Bank LimitedHabib Metro Bank LimitedKASB Bank LimitedMCB Bank LimitedNational Bank of PakistanNIB Bank LimitedPak Libya Holding Co. (Pvt.) LimitedPakistan Kuwait Investment Co. (Pvt.) LimitedPak Brunei Investment Co. (Pvt.) LimitedStandard Chartered Bank (Pakistan) LimitedThe Bank of PunjabUnited Bank Limited

Auditors M/s. BDO Ebrahim & Co., Chartered Accountantsnd2 Floor, Block- C, Lakson Square Building No.1

Sarwar Shaheed Road, KarachiPh: 021 - 35683189, 35683498, Fax: 021 - 35684239

Legal Advisors Cornelius, Lane & MuftiAdvocates & SolicitorsNawa-e-Waqt House4 - Shahrah - e - Fatima JinnahLahore - 54000

AN

NU

AL R

EP

OR

T

02

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Corporate InformationCorporate Information

AN

NU

AL R

EP

OR

T

03

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

th NOTICE is hereby given that the 24 Annual General Meeting of the shareholders of Ittehad Chemicals

Limited will be held on Wednesday, October 21, 2015, at 11:00 a.m. at the Registered Office

at 39 - Empress Road, Lahore to transact the following business:

Ordinary Business:

1. To confirm the Minutes of Annual General Meeting held on October 31, 2014.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the Financial

Year ended June 30, 2015 together with the Directors' and Auditors' Reports thereon.

3. To approve Final Cash Dividend of Rs. 1 per share i.e. 10% as recommended by the Board of Directors.

4. To appoint Auditors for the year 2015-16 and to fix their remuneration. M/s BDO Ebrahim & Co.,

Chartered Accountants retire and being eligible, have offered themselves for re-appointment.

5. Any other business with the permission of the Chair.

By Order of the Board

Abdul Mansoor Khan

Company Secretary

Lahore

August 28, 2015

Notes:-

i. The Share Transfer Books of the Company will remain closed from October 09, 2015 to October 23,

2015 (both days inclusive). Transfers received in order by our Share Registrars, M/s Corplink (Pvt.)

Limited, Wings Arcade, 1-K Commercial, Model Town, Lahore by the close of business on October 08,

2015 will be considered in time for the purpose of payment of cash dividend to the transferees and

determination of their entitlement for 30% right shares (i.e. Issuance of 30 right shares at Rs. 20

including premium of Rs. 10 per share for every 100 ordinary shares held).

ii. A member of the Company entitled to attend and vote at this meeting may appoint another member

as his/her proxy to attend and vote on his/her behalf. The proxy, in order to be effective, must be

received at the registered office of the Company duly signed and stamped not less than 48 hours

before the time of meeting.

iii. The CDC Account holders/sub-account holders are requested to bring with them their original

CNICs or Passports along with the Participant(s) ID Number and CDC account numbers at the time of

attending the Annual General Meeting for identification purpose.

iv. In case of Corporate entity, the Board of directors' resolution/power of attorney with specimen

signatures of the nominee shall be produced (unless it has been provided earlier) at the time of the

meeting. The nominee shall produce his original CNIC at the time of attending the meeting for

identification purpose.

Notice of Annual General Meeting

AN

NU

AL R

EP

OR

T

04

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

v. Members are requested to notify the change of address immediately, if any, to our Share Registrars.

vi. Securities and Exchange Commission of Pakistan (SECP) vide its S.R.O. 787(I) / 2014 has facilitated

the Companies to circulate Audited Financial Statements through e-mail after obtaining prior

written consent of its members. The members who intend to receive the Audited Accounts through

email are therefore, requested to kindly send their written consent along with e-mail addresses.

vii. The Government of Pakistan has made certain amendments in the Income Tax Ordinance, 2001

whereby different rates are prescribed for deduction of withholding tax on the amount of dividend

paid by the Companies. These tax rates are (a) 12.50 % for filers of income tax returns and (b) 17.50%

for non-filers of income tax returns.

To enable the Company to make tax deduction on the amount of cash dividend @ 12.50% instead of

17.50%, all Members whose names are not entered into the Active Tax payers List (ATL) provided on

the website of FBR, despite the fact that they are filers, are advised to make sure that their names are

entered into ATL before the date of payment of the cash dividend otherwise tax on their cash

dividend will be deducted @ 17.50% instead of 12.50%.

viii. In pursuant to the clarification of FBR, in case of joint account each joint holder is to be treated

individually as either a filler or non filer and tax will be deducted on the basis of shareholding of each

joint holder as may be notified by the members (CDC & Physical), in writing duly signed by each joint

holder along with copies of CNICs as follows to the Registrar of the Company. If the response to the

notification is not received within stipulated time, each joint holder shall be assumed to have equal

number of shares.

Folio/CDC A/c No : Name of Company:

Total Shares Principal Share Holder Shares Joint Share Holder Shares

Held (Name & CNIC) Held (Name & CNIC) Held

ix. As already communicated, SECP has directed vide its S.R.O. 831(I) / 2012 that the dividend warrants

should bear the CNICs of the registered members or the authorized person except in the case of

minor(s) and corporate members. CNIC numbers are, hence, mandatory for the issuance of dividend

warrants and in the absence of such information, payment of dividend may be withheld. Therefore,

the members who have not yet provided their CNICs are once again advised to provide the attested

copies of their CNICs (if not already provided) to our Share Registrar.

X. In order to make process of payment of cash dividend more efficient, e-dividend mechanism has

been envisaged by SECP where shareholders can get amount of the dividend credited into their

respective bank accounts electronically. In this way, dividends may be instantly credited to

respective bank accounts and there are no chances of dividend warrants getting lost in the post,

undelivered or delivered to the wrong address, etc. The Securities and Exchange Commission of

Pakistan (SECP) through Notice No. 8(4) SM/CDC 2008 dated April 05, 2013 has advised all listed

companies to adopt e-dividend mechanism due to the benefits it entails for their members. In view of

the above, you are hereby encouraged to provide a dividend mandate in favour of e-dividend by

providing dividend mandate form duly filled in and signed.

xi. The Annual Report for the Financial Year ended June 30, 2015 will be placed on Company's website

www.ittehadchemicals.com in due course of time.

AN

NU

AL R

EP

OR

T

05

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

The Directors of the company take pleasure to present the Annual Report along with Audited Financial

Statements for the Financial Year ended June 30, 2015 and Auditors' Report thereon.

PAKISTAN'S ECONOMY

Pakistan's economic indicators remained strong during the year 2014-15. The Balance of payments

position has considerably improved with current account deficit well below the target; thanks to

significant drop in international crude oil prices. All the macro economics indicators e.g. increase in foreign

exchange reserves, narrowing of budget deficit, declined in the rate of inflation and modest rise in growth

rate despite energy deficit show that Pakistan economy looks to be at the verge of takeoff. If the

government takes required steps in order to manage both energy and security issues on urgent basis then

the economy can significantly flourish. Going forward, the country's future growth depends on its ability

to capitalize on recent stability.

INDUSTRY REVIEW

The chlor-alkali sector is power intensive accordingly, fuel expense accounted for more than 50% of its cost

of sales. Pakistan has been facing acute shortage of energy for quite a number of years now. Due to lack of

maintenance and inadequate investment, some of the installed sources of electricity are unable to run at

full capacity, leading to drop in supply. Presently the sector is drastically impacted by energy crisis as well as

increase in Gas Infrastructure Development Cess (GIDC) introduced through GIDC Act 2015.

The sector is oligopolistic; hence undue competition has also negatively influenced the Chemical industry.

Directors’ Report to Shareholders

AN

NU

AL R

EP

OR

T

06

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

FINANCIAL PERFORMANCE

The capacity utilization of the plants remained depressed during the year under review mainly on account

of persistent load shedding and inconsistent availability of gas which resulted increase in fixed cost per ton.

Stiff market competition and increase in energy cost squeezed the margin further. As a result, gross profit

margin declined to 10% from 20% vis-à-vis corresponding year.

Company posted net sales revenue of Rupees 4,046 Million for the Financial Year under review (2014:

Rupees 4,104 Million). The cost of sales stood at Rupees 3,623 Million (2014: Rupees 3,291 Million)

bringing gross profit to Rupees 423 Million (2014: Rupees 813 Million). After tax credit of Rupees 158

Million availed on company's recent BMR, profit for the year is Rupees 84 Million (2014: Rupees 200 Million).

Earning(s) per share is Rupees 1.69 per share (2014: Rupees 4.01 per share).

FINANCIAL HIGHLIGHTS

The comparative financial results for the year ended June 30, 2015 are hereunder:

Net Sales 4,103,853

Gross Profit 813,027

Operating Profit 405,372

(Loss) / Profit before Tax 281,150

Profit after Tax 200,376

Earnings Per Share (Rupees) 4.01

PROFIT AND APPROPRIATIONS DURING THE YEAR

Total comprehensive income for the year 200,376

Add: - Un-appropriated profit brought forward 1,016,226

Profit available for appropriation 1,216,602

Appropriations

- Final cash dividend paid @ 10 % for

the financial year 2013-14 (2012-2013: 10 %) (36,000)

- Bonus Shares issued during the year (140,000)

Profit available for appropriation 1,040,602

4,045,537

422,938

30,769

(73,917)

84,487

1.69

87,587

1,040,602

1,128,189

(50,000)

-

1,078,189

Financial Year ended June 30

2015 2014

Rupees in “000”

Financial Year ended June 30

2015 2014

Rupees in “000”

AN

NU

AL R

EP

OR

T

07

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

CASH DIVIDEND

The Board of Directors is pleased to propose a final cash dividend of Rs. 1 per share i.e. 10% for the financial

year ended June 30, 2015. The final dividend is subject to the approval of shareholders in their meeting

scheduled to be held on October 21, 2015.

BALANCING, MODERNIZATION AND REPLACEMENT (BMR)

By the grace of Almighty Allah, we are pleased to inform that the Company's state of the art power efficient

Ion Exchange Membrane Plant-2 (Phase-I having capacity 25,000 M. Ton Per Annum) has commenced its

commercial operations during June 2015. The inclusion of new IEM Plant in company's operations testifies

to the Management's commitment to enhance the shareholders' value. Other cost efficient measures like

Up-gradation of gas fired power plant also accomplished during the year.

The management of the company is persistently taking cost efficient measures. The Board of directors has

initiated work on IEM Plant-2 Phase-II having capacity 25,000 M. Ton Per Annum in order to replace its old

high power consuming Caustic Soda Plant. Total Project Cost of IEM Plant (Phase II) is projected Rupees

750 Million which will be financed through Equity (Right Issue) Rupees 300 Million plus Long term Debt

Rupees 450 Million. The new IEM Plant-2 (Phase-II) shall further contribute towards the Company's

profitability.

RIGHT ISSUEthThe Board of Directors in their Meeting held on 28 August 2015 has decided to Issue 30% Right Shares in

proportion of 30 shares for every 100 shares held on entitlement date at Rs. 20/- per share (including

premium of Rupees 10/- per share). The funds so accumulated shall be utilized for setting up IEM Plant

Phase II.

JCR-VIS Credit Rating

During the year, credit rating of the Company was reassessed by JCR-VIS Credit Rating Co. Ltd., and it has

reaffirmed the medium to long-term entity rating of Ittehad Chemicals Limited (ICL) at 'A-' (Single A Minus)

and short-term entity rating at 'A-2' (A-Two). Outlook on the assigned rating is 'Stable' as announced on

December 22, 2014. These ratings depict high credit quality and a low credit risk i.e. strong position for

timely payments of financial commitments.

BOARD AND ITS COMMITTEES' MEETINGS AND ATTENDANCE

During the year, five (05) Board meetings, four (04) Audit Committee meetings and two (02) HR &

Remuneration Committee Meetings were held. The attendance of Board and its Committees' members is

hereunder:

Name of Director Board of Audit HR & R

Directors Committee CommitteeMr. Muhammad Siddique Khatri 5 N/A N/AMr. Abdul Sattar Khatri 5 N/A N/AMr. Abdul Ghafoor Khatri 5 4 2Mr. Waqas Siddiq Khatri 5 N/A 2Mr. Ahmed Mustafa 5 4 2Ms. Farhana Abdul Sattar Khatri 5 N/A N/AMr. Pervaiz Ahmad Khan 5 4 N/A

Number of Meetings attended

AN

NU

AL R

EP

OR

T

08

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

DIRECTORS' TRAINING PROGRAMS

The Directors are aware of their fiduciary responsibilities. During the year, the Board has arranged

certification offered by University of Lahore (one of the SECP approved Institute for Directors' Training

Program) for Mr. Pervaiz Ahmad Khan, Independent Director of the Company. He has successfully

attained this certification.

CODE OF CONDUCT

Behavior reflecting high ethical, moral and legal conducts is expected from all employees of the company

regardless of their title or location which is an individual responsibility; however, company has defined

certain standards and obligations. The Code of Conduct has been disseminated to all its employees

throughout the Company and placed on the website of the Company.

COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

The compliance with the best practices of Code of Corporate Governance is always ensured by the Board.

A statement to this effect is annexed.

CORPORATE AND FINANCIAL REPORTING FRAMEWORK

Following are the statements on Corporate and Financial Reporting Framework:

i. The financial statements together with notes thereon have been drawn up by the management in

conformity with the Companies Ordinance, 1984. These statements present the Company's state of

affairs fairly, the results of its operations, cash flow and changes in equity.

ii. Proper books of accounts of the Company have been maintained.

iii. Appropriate accounting policies have been consistently applied in preparation of financial

statements and accounting estimates are based on reasonable and prudent judgment.

iv. International Financial Reporting Standards, as applicable in Pakistan, have been followed in

preparation of financial statements and any departures there from has been adequately disclosed

and explained.

v. The system of internal control is sound in design and has been effectively implemented and

monitored.

vi. There are no significant doubts upon the Company's ability to continue as a going concern.

vii. The key operating and financial data for the last six years is annexed.

viii. Information about outstanding taxes and levies is given in Notes to the Accounts.

ix. The value of investments of the Provident Fund based on its audited accounts as on June 30, 2015 is

given in Note # 39 of the Financial Statements.

AN

NU

AL R

EP

OR

T

09

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

X. All material information, as described in the Code is disseminated to the Stock Exchange and

Securities and Exchange Commission of Pakistan in a timely fashion.

xi. The company has complied with requirements as stipulated in Code relating to related party

transactions.

Xii. The trading (if any) made by directors, CEO, CFO, Company Secretary and their spouses and minor

children in the company's share during the year and the number of shares, if any, held by them are

annexed.

HEALTH, SAFETY AND ENVIRONMENT

We are committed to provide a safe and healthy work environment to our employees. The Company

meets applicable laws and government regulations as well as Company's own standards. We actively

strive for eliminating all possible causes of accidents, preventing environmental pollution, minimizing

waste, energy conservation, safety awareness, training, emergency preparedness and managing

environmental impact that can affect the surrounding communities and the environment at large. The

Company has been certified for ISO 9001:2008 - Quality Management System and ISO 14001:2004 -

Environmental Management System by Moody International Certification Limited.

AN

NU

AL R

EP

OR

T

10

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

CORPORATE SOCIAL RESPONSIBILITY

Our main CSR focuses are Health Care, Education and community development. ICL continued to provide

financial support to various organizations operating in the fields of Education, Health and Social uplift.

During the year under review, company contributed Rupees 6,772,276 to various charitable

organizations.

EXTERNAL AUDITORS

The present auditors M/s. BDO Ebrahim & Co., Chartered Accountants, retire and being eligible offered

themselves for re-appointment for the year 2015-16. As suggested by the Audit Committee, the Board of

Directors has recommended their re-appointment as Auditors of the Company for the ensuing year

subject to approval of the members in the forthcoming Annual General Meeting. The external auditors

have been given a satisfactory rating under the Quality Control Review by the Institute of Chartered

Accountants of Pakistan.

PATTERN OF SHAREHOLDING

The pattern of shareholding under section 236(d) and information under clause XVI(J) of the Code of

Corporate Governance as on June 30, 2015 are annexed.

AN

NU

AL R

EP

OR

T

11

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

FUTURE OUTLOOK

Pakistan's economy is gradually moving towards sustainable growth phase. The company is also set to

embark on a higher growth trajectory due to accomplishment of its various ventures. The Company's state

of the art power efficient Ion Exchange Membrane Plant-2 (Phase-I having capacity 25,000 M. Ton Per

Annum) has commenced its commercial operations during June 2015 and shall make its contribution

towards the Company's profitability. The work on IEM Plant-2 Phase-II having capacity 25,000 M. Ton Per

Annum has been initiated. Hence, the operational indicators for the future are satisfactory. Future

prospects of the industry will also depend on the Government energy policies which may assist to reduce

the impact of higher production cost.

ACKNOWLEDGEMENT

Board is thankful to the valuable Shareholders, Customers, Banks and Government departments for their

trust, confidence, persistent support and patronage and would like to place on record its gratitude to all

the Employees of the company for their contribution, dedication and hard work.

On behalf of the Board

Lahore Muhammad Siddique Khatri

August 28, 2015 Chairman

AN

NU

AL R

EP

OR

T

12

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Operating and Financial Highlights

AN

NU

AL R

EP

OR

T

13

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Unit 2010 2011 2012 2013 2014 2015PROFIT AND LOSS

Sales

Gross Profit

Operating Profit

Profit / (loss) before tax

Profit after tax

EBITDA

Earning per share - Restated

BALANCE SHEET

Operating Fixed assets (NBV)

Current Assets

Current Liabilities

Long Term Liabilities

Share capital

Shareholders' Equity

INVESTOR INFORMATION

Gross Profit Margin

Net Profit Margin

Return on Equity

Price Earning Ratio - Restated

Net Asset Per Share

Long -Term Debt to Equity Ratio

Current Ratio

Quick Ratio

Interest Coverage Ratio

Debtor Turnover

Inventory Turnover

Dividend Payout

Bonus Shares

Dividend Per Share

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

Rs.

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

Rs. in mln

%

%

%

Rs.

No. of Times

No. of Times

%

%

Rs.

3,258

706

364

151

157

571

3.14

2,471

1,261

1,023

1,163

360

946

21.67

4.82

17.55

10.45

26.28

1.25

1.23

0.60

1.68

7.50

3.96

11.85

-

0.50

3,310

688

335

109

105

532

2.10

2,499

1,347

1,334

942

360

1,011

20.79

3.17

10.73

14.01

28.08

1.00

1.01

0.53

1.46

8.39

4.07

35.34

-

1.00

4,004

802

430

228

160

626

3.20

2,515

1,346

1,459

646

360

1,154

20.03

4.00

14.78

7.32

32.06

0.56

0.92

0.54

2.09

8.50

5.69

33.78

-

1.50

4,278

865

453

333

295

637

5.89

2,496

1,619

1,722

411

360

1,376

20.23

6.89

23.29

7.38

38.23

0.21

0.94

0.52

3.71

8.09

4.74

18.33

38.89

1.50

4,104

813

405

281

200

592

4.01

2,485

1,704

1,491

909

500

1,541

19.81

4.88

13.74

8.06

30.81

0.43

1.14

0.60

3.04

7.85

4.06

24.94

-

1.00

4,046

423

31

(74)

84

225

1.69

3,756

1,437

2,045

933

500

1,578

10.45

2.09

5.42

27.69

31.56

0.69

0.70

0.39

0.28

10.21

5.66

59.18

-

1.00

Note: Previous year figures have been rearrange and / or reclassified, wherever, necessary for the purpose of comparison.

Wealth Generated:

Total revenue net of discount and allownces 4,796

Bought-in-material and services 3,132

1,664

Wealth Distributed:

To Employees

Salaries, benefits and other costs 430

To Government

Income tax, sales tax, special excise duty & WWF 722

To Providers of capital

To shareholders (Dividend & Bonus Shares) 176

To Financial Institutes (Mark up/interest on borrowed funds) 133

Retained for Reinvestment and Growth

Depreciation and retained profits 202

1,664

4,728

3,423

1,305

455

466

50

109

224

1,305

20142015

(Rs. in Million)

Statement of Value Added

Year ended June 30,

AN

NU

AL R

EP

OR

T

14

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

36%

17%

35%

8%

4%

This statement is being presented to comply with the best practices of the Code of Corporate Governance

(CCG) set out in the listing regulations of Karachi Stock Exchange for the purpose of establishing a

framework of good governance, whereby a listed company is managed in compliance with the best

practices of corporate governance.

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive directors and directors

representing minority interests on its Board of Directors. At present the Board includes:

The independent director meets the criteria of independence under clause 5.19.1 (b) of the CCG.

2. The directors have confirmed that none of them is serving as a director in more than seven listed

companies, including this company.

3. All the resident directors of the Company are registered as taxpayers and none of them has defaulted

in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock

exchange, has been declared as a defaulter by that stock exchange.

4. The company has prepared a “Code of Conduct” and has ensured that appropriate steps have been

taken to disseminate it throughout the Company along with its supporting policies and procedures.

5. The Board has developed a vision & mission statement, overall corporate strategy and significant

policies of the Company. A complete record of particulars of significant policies along with the dates

on which they were approved or amended has been maintained.

6. All the powers of the Board have been duly exercised and decisions on material transactions,

including appointment and determination of remuneration and terms and conditions of employment

of the CEO, other executive and non-executive directors, have been taken by the Board.

7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director

elected by the Board for this purpose and the Board met at least once in every quarter. Written notices

of the Board meetings, along with agenda and working papers, were circulated at least seven days

before the meetings. The minutes of the meetings were appropriately recorded and circulated.

Statement of Compliance With the code of CorporateGovernance for the year ended June 30, 2015

Mr. Muhammad Siddique KhatriMr. Abdul Ghafoor KhatriMs. Farhana Abdul Sattar KhatriMr. Ahmed Mustafa

Category Names

Independent

Executive Directors

Non-Executive Directors

Mr. Pervaiz Ahmad Khan

Mr. Abdul Sattar KhatriMr. Waqas Siddiq Khatri

AN

NU

AL R

EP

OR

T

15

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

8. The Board has arranged certification offered by University of Lahore (one of the approved Institute for

Directors' Training Program) for Mr. Pervaiz Ahmad Khan, Independent Director of the Company. He

has successfully attained this certification.

9. During the year, there was no change in the position of Chief Financial Officer (CFO) and, Company

Secretary however, the Board has approved the appointment of Head of Internal Audit including his

remuneration and terms and conditions of his employment.

10. The Directors' Report for this year has been prepared in compliance with the requirements of the CCG

and fully describes the salient matters required to be disclosed.

11. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the

Board.

12. The directors, CEO and executives do not hold any interest in the shares of the Company other than

that disclosed in the pattern of shareholding.

13. The Company has complied with all the corporate and financial reporting requirements of the CCG.

14. The Board has formed an Audit Committee. It comprises three (03) members, of whom one is

independent and two are non-executive directors. The chairman of the committee is a Non-Executive

Director.

15. The meetings of the Audit Committee were held at least once every quarter prior to approval of

interim and final results of the Company and as required by the CCG. The terms of reference of the

committee have been formed and advised to the committee for compliance.

16. The Board has formed an HR and Remuneration Committee. It comprises three (03) members, of

whom two are non-executive directors including the chairman of the committee.

17. The Board has set up an effective internal audit function. The staff is suitably qualified and

experienced for the purpose and is conversant with the policies and procedures of the Company.

18. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating

under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP),

that they or any of the partners of the firm, their spouses and minor children do not hold shares of the

Company and that the firm and all its partners are in compliance with International Federation of

Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants

of Pakistan (ICAP).

19. The statutory auditors or the persons associated with them have not been appointed to provide other

services except in accordance with the listing regulations and the auditors have confirmed that they

have observed IFAC guidelines in this regard.

AN

NU

AL R

EP

OR

T

16

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

20. The 'closed period', prior to the announcement of interim/final results, and business decisions, which

may materially affect the market price of company's securities, was determined and intimated to

directors, employees and stock exchange.

21. Material/price sensitive information has been disseminated among all market participants at once

through stock exchange.

22. We confirm that all other material principles enshrined in the CCG have been complied with.

Lahore Muhammad Siddique Khatri

August 28, 2015 Chairman

AN

NU

AL R

EP

OR

T

17

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of

Corporate Governance (the Code) prepared by the Board of Directors of ITTEHAD CHEMICALS LIMITED

("the Company") for the year ended June 30, 2015 to comply with the requirements of Listing Regulation

No. 35 of Karachi Stock Exchange where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our

responsibility is to review, to the extent where such compliance can be objectively verified, whether the

Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code

and report if it does not and to highlight any non-compliance with the requirements of the Code. A review

is limited primarily to inquiries of the Company's personnel and review of various documents prepared by

the Company to comply with the Code.

As part of our audit of the financial statements we are required to obtain an understanding of the

accounting and internal control systems sufficient to plan the audit and develop an effective audit

approach. We are not required to consider whether the Board of Directors' statement on internal control

covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the

Company's corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the

Audit Committee, place before the Board of Directors for their review and approval its related party

transactions distinguishing between transactions carried out on terms equivalent to those that prevail in

arm's length transactions and transactions which are not executed at arm's length price and recording

proper justification for using such alternate pricing mechanism. We are only required and have ensured

compliance of this requirement to the extent of the approval of the related party transactions by the Board

of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to

determine whether the related party transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention, which causes us to believe that the Statement of

Compliance does not appropriately reflect the Company's compliance, in all material respects, with the

best practices contained in the Code as applicable to the Company for the year ended June 30, 2015.

BDO Ebrahim & Co

Karachi Chartered Accountants

Dated: August 28, 2015 Engagement Partner: Qasim E Causer

Review Report to the Members on the Statements ofCompliance with the code of Corporate Governance

AN

NU

AL R

EP

OR

T

18

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Financial StatementsFor the year ended June 30, 2015

AN

NU

AL R

EP

OR

T

19

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Auditors’ Report to the Members

AN

NU

AL R

EP

OR

T

20

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

We have audited the annexed balance sheet of 1TTEHAD CHEMICALS LIMITED ("the Company") as at June 30, 2015 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of Internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

a) in our opinion, proper books of accounts have been kept by the Company as required by the Companies Ordinance, 1984;

b) in our opinion:

i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied;

ii) the expenditure incurred during the year was for the purpose of the Company's business; and

iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company;

c) in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at June 30, 2015 and of the profit, its comprehensive income, cash flows and changes in equity for the year then ended; and

d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company and deposited in the Central Zakat fund established under Section 7 of that Ordinance.

BDO Ebrahim & CoKarachi Chartered AccountantsDated: August 28, 2015 Engagement Partner: Qasim E Causer

ASSETSNON CURRENT ASSETS

Property, plant and equipmentOperating fixed assets 5 2,484,852 Capital work in progress 6 371,876

2,856,728 Intangible assets 7 16,904 Investment property 8 82,800 Long term investments 9 - Long term deposits 10 40,558

2,996,990

CURRENT ASSETSStores, spares and loose tools 11 527,608 Stock in trade 12 283,871 Trade debts 13 609,505 Loans and advances 14 73,751Trade deposits and short term prepayments 15 7,219 Tax refunds due from the Government 16 31,145 Taxation - net 17 26,211 Cash and bank balances 18 145,024

1,704,334

TOTAL ASSETS 4,701,324

EQUITY AND LIABILITIESSHARE CAPITAL AND RESERVES

Authorized share capital 19.1 1,000,000

Issued, subscribed and paid up capital 19.2 500,000 Unappropriated profit 1,040,602

1,540,602

SURPLUS ON REVALUATION OF FIXED ASSETS 20 760,819

NON CURRENT LIABILITIESLong term financing 21 208,361 Long term diminishing musharaka 22 365,586 Liabilities against assets subject to finance lease 23 -Deferred liabilities 24 335,306

909,253

CURRENT LIABILITIESTrade and other payables 25 436,909Mark-up accrued 26 33,281

Short term borrowings 27 930,622 Current portion of long term liabilities 28 89,838

1,490,650

CONTINGENCIES AND COMMITMENTS 29 -

TOTAL EQUITY AND LIABILITIES 4,701,324

The annexed notes from 1 to 49 form an integral part of these financial statements.

3,756,17921,606

3,777,78512,78887,000

-36,557

3,914,130

468,376171,440461,589

80,6357,766

43,09684,880

119,390

1,437,172

5,351,302

1,000,000

500,0001,078,189

1,578,189

794,848

390,278360,875

196181,782

933,131

801,59148,076

862,742332,725

2,045,134

-

5,351,302

Balance Sheetas at June 30, 2015

20142015

Note Rupees in thousand

DIRECTORCHIEF EXECUTIVE

AN

NU

AL R

EP

OR

T

21

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Sales 30 4,103,853 Cost of sales 31 (3,290,826)

Gross profit 813,027

Selling and distribution expenses 32 (231,679)General and administrative expenses 33 (163,506)Other operating expenses 34 (22,770)Other income 35 10,300

(407,655)

Operating profit 405,372 Financial charges 36 (133,222)Fair value gain on investment property 8 9,000

(Loss) / profit before taxation 281,150 Taxation 37 (80,774)

Profit after taxation 200,376

Earning per share - Basic and diluted (Rupees) 40 4.01

Appropriations have been reflected in the statement of changes in equity.

The annexed notes from 1 to 49 form an integral part of these financial statements.

4,045,537(3,622,599)

422,938

(245,744)(159,516)

(787)13,878

(392,169)

30,769(108,886)

4,200

(73,917)158,404

84,487

1.69

Profit and Loss Account

20142015

Note Rupees in thousand

DIRECTORCHIEF EXECUTIVE

For the year ended June 30, 2015

AN

NU

AL R

EP

OR

T

22

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Profit after taxation for the year 200,376

Other comprehensive incomeItems that will not be reclassified to profit and loss account

Remeasurement of defined benefit liability 24.3 - Related tax effect -

-

Total comprehensive income for the year 200,376

The annexed notes from 1 to 49 form an integral part of these financial statements.

84,487

4,358(1,258)

3,100

87,587

20142015

Note Rupees in thousand

DIRECTORCHIEF EXECUTIVE

For the year ended June 30, 2015Statement of Comprehensive Income

AN

NU

AL R

EP

OR

T

23

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Cash flows from operating activities(Loss) / profit before tax 281,150 Adjustments for items not involving movement of funds:

Depreciation 5.3 181,808 Amortization of intangible assets 33 5,229 Provision for staff retirement gratuity 24.3 11,835 Gain on sale of fixed assets 35 (1,762)Gain on revaluation of investment property 8 (9,000)Foreign exchange (gain) / loss 34 & 35 1,088 Provision for doubtful debts 13 3,481 Bad debts written off 33 1,524 Financial charges 36 133,222

Net cash flow before working capital changes 608,575 Decrease / (increase) in current assets

Stores, spares and loose tools (81,188)Stock in trade (9,995)Trade debts (7,072)Loans and advances (22,523)Trade deposits and short term prepayments (112)Other receivables 10,414 Tax refunds due from the Government (6,375)

(116,851)Increase / (decrease) in current liabilities

Trade and other payables (400,708)

Cash generated from operations 91,016 Taxes paid (92,087)Gratuity paid (3,807)Financial charges paid (132,446)

Net cash generated from / (used in) operating activities (137,324)

Cash flows from investing activitiesAdditions to operating fixed assets (66,359)Additions to capital work in progress (448,159)Proceeds from sale of operating fixed assets 2,414 Long term deposits (1,190)

Net cash used in investing activities (513,294)

Cash flows from financing activitiesProceeds from long term financing 217,000 Repayments of long term financing (89,445)Proceeds from long term diminishing musharaka 365,586 Repayments of long term diminishing musharaka (83,333)Repayment of long term murabaha (38,889)Repayment of finance lease liabilities - Dividend paid (36,611)Short term borrowings 280,663

Net cash generated from financing activities 614,971

Net decrease in cash and cash equivalents (35,647)Cash and cash equivalents at the beginning of the year 180,671

Cash and cash equivalents at the end of the year 18 145,024

The annexed notes from 1 to 49 form an integral part of these financial statements.

(73,917)

190,0984,116

12,882(1,814)(4,200)(4,520)19,203

1,008108,886

251,742

59,232112,431132,225

(6,884)(547)

-(9,202)

287,255

364,548

903,545(64,628)

(1,613)(183,348)

653,956

(43,782)(946,491)

4,5914,001

(981,681)

385,992(85,028)118,986

--(33)

(49,946)(67,880)

302,091

(25,634)145,024

119,390

20142015

Note Rupees in thousand

DIRECTORCHIEF EXECUTIVE

For the year ended June 30, 2015Cash Flow Statement

AN

NU

AL R

EP

OR

T

24

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Balance as at July 01, 2013 360,000 1,016,226 1,376,226

Transaction with owners:Final cash dividend 2013: Re. 1 per share - (36,000) (36,000)Bonus shares issued during the year 140,000 (140,000) -

140,000 (176,000) (36,000)

Total comprehensive income for the yearProfit for the year - 200,376 200,376 Remeasurement of defined benefit liability - net - - -

- 200,376 200,376

Balance as at June 30, 2014 500,000 1,040,602 1,540,602

Transaction with owners:Final cash dividend 2014: Re. 1 per share - (50,000) (50,000)

Total comprehensive income for the yearProfit for the year - 84,487 84,487 Remeasurement of defined benefit liability - net - 3,100 3,100

- 87,587 87,587

Balance as at June 30, 2015

The annexed notes from 1 to 49 form an integral part of these financial statements.

500,000 1,078,189 1,578,189

Statement of Changes in Equity

Rupees in thousand

DIRECTORCHIEF EXECUTIVE

For the year ended June 30, 2015

Issued,subscribed andpaid-up capital

Unappropriatedprofits Total

AN

NU

AL R

EP

OR

T

25

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

For the year ended June 30, 2015Notes to the Financial Statements

1 LEGAL STATUS AND NATURE OF BUSINESS

Ittehad Chemicals Limited (the Company) was incorporated on September 28, 1991 to takeover the assets of Ittehad Chemicals and Ittehad Pesticides under a Scheme of Arrangement dated June 18, 1992 as a result of which the Company became a wholly owned subsidiary of Federal Chemical and Ceramics Corporation (Private) Limited. The Company was privatised on July 03, 1995.

The Company was listed on Karachi Stock Exchange on April 14, 2003 when Sponsors of the Company offered 25% of the issued, subscribed and paid up shares of the Company to the general public.

The registered office of the Company is situated at 39, Empress Road, Lahore. The Company is engaged in the business of manufacturing and selling caustic soda and other allied chemicals.

2 BASIS OF PREPARATION

2.1 Statement of compliance

These financial statements have been prepared in accordance with the requirements of the Companies Ordinance, 1984 (the Ordinance), directives issued by the Securities and Exchange Commission of Pakistan (SECP) and approved financial reporting standards as applicable in Pakistan. Approved financial reporting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the SECP differ with the requirements of these standards, the requirements of the Ordinance and of the said directives have been followed.

2.2 Accounting convention

These financial statements have been prepared under the historical cost convention except as modified for fair value adjustment in freehold land, investment property, investments and exchange differences as referred to in notes 4.1, 4.4, 4.5, and 4.19 respectively.

The preparation of financial statements in conformity with approved financial reporting standards requires management to make estimates, assumptions and use judgments that effect the application of policies and reported amounts, of assets and liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognized prospectively commencing from the period of revision.

Judgments and estimates made by the management that may have a significant risk of material adjustments to the financial statements in subsequent years are disclosed in note 38.

2.3 Functional and presentation currency

These financial statements are presented in Pak Rupees, which is the functional and presentation currency for the Company.

3 NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED ACCOUNTING STANDARDS

3.1 Standards or interpretations that are effective in current year but not relevant to the Company

The Company has adopted the following accounting standards and interpretations which became effective during the year:

AN

NU

AL R

EP

OR

T

26

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Effective date(annual periods

Beginningon or after)

IFRIC 21 Levies January 01, 2014

3.2 Amendments that are effective in current year but not relevant to the Company

The Company has adopted the amendments to the following accounting standards which became effective during the year:

IFRS 2

IFRS 3

IFRS 8

IFRS 10

IFRS 12

IFRS13

IAS 16

IAS 19

IAS 24

IAS 27

IAS 32

IAS 36

IAS 38

Share-based Payment - Amendments resulting from Annual Improvements 2010-2012 Cycle (definition of 'vesting condition')

Business Combinations - Amendments resulting from Annual Improvements 2010-2012 Cycle (accounting for contingent consideration) and 2011-2013 Cycle (scope exception for joint ventures)

Operating Segments - Amendments resulting from Annual Improvements 2010-2012 Cycle (aggregation of segments, reconciliation of segment assets)

Consolidated Financial Statements - Amendments for investment entities

Disclosure of Interests in Other Entities - Amendments for investment entities

Fair Value Measurement - Amendments resulting from Annual Improvements 2011-2013 Cycle (scope of the portfolio exception in paragraph 52)

Property, Plant and Equipment - Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)

Employee Benefits - Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service

Related Party Disclosures - Amendments resulting from Annual Improvements 2010-2012 Cycle (management entities)

Separate Financial Statements - Amendments for investment entities

Financial Instruments - Presentation - Amendments relating to the offsetting of assets and liabilities

Impairment of Assets - Amendments arising from recoverable amount disclosures for non financial assets

Intangible Assets - Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)

July 01, 2014

July 01, 2014

July 01, 2014

January 01, 2014

January 01, 2014

July 01, 2014

July 01, 2014

July 01, 2014

July 01, 2014

January 01, 2014

January 01, 2014

January 01, 2014

July 01, 2014

AN

NU

AL R

EP

OR

T

27

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

IAS 39

IAS 40

Financial Instruments: Recognition and Measurement - Amendments for novations of derivatives.

Investment Property - Amendments resulting from Annual Improvements 2011-2013 Cycle (interrelationship between IFRS 3 and IAS 40)

January 01, 2014

July 01, 2014

Effective date(annual periods

BeginningOn or after)

IFRS 5

IFRS 7

IFRS 9

IFRS 10

IFRS 10

IFRS 11

IFRS 12

IAS 1

IAS 16

IAS 19

IAS 27

IAS 28

Non-current Assets Held for Sale and Discontinued Operations: Amendments resulting from September 2014 Annual Improvements to IFRSs

Financial Instruments: Disclosures - Amendments resulting from September 2014 Annual Improvements to IFRSs (Servicing Contracts and Applicability of the offsetting amendments in condensed interim financial statements)

Financial Instruments - Finalised version, incorporating requirements for classification and measurement, impairment, general hedge accounting and derecognition.

Consolidated Financial Statements - Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture

Consolidated Financial Statements - Amendments regarding the application of the consolidation exception

Joint Arrangements - Amendments regarding the accounting for acquisitions of an interest in a joint operation

Disclosure of Interests in Other Entities - Amendments regarding the application of the consolidation exception

Presentation of Financial Statements - Amendments resulting from the disclosure initiative

Property, Plant and Equipment - Amendments regarding the clarification of acceptable methods of depreciation and amortisation and amendments bringing bearer plants into the scope of IAS 16

Employee Benefits - Amendments resulting from September 2014 Annual Improvements to IFRSs

Separate Financial Statements (as amended in 2011) -Amendments reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity's separate financial statements

Investments in Associates and Joint Ventures - Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture

January 01, 2016

January 01, 2016

January 01, 2018

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2015

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

3.3 Amendments not yet effective

The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation:

AN

NU

AL R

EP

OR

T

28

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Effective date(annual periods

Beginningon or after)

IAS 28

IAS 34

IAS 38

IAS 39

IAS 41

Investments in Associates and Joint Ventures - Amendments regarding the application of the consolidation exception

Interim Financial Reporting - Amendments resulting from September 2014 Annual Improvements to IFRSs

Intangible Assets - Amendments regarding the clarification of acceptable methods of depreciation and amortisation

Financial Instruments: Recognition and Measurement: Amendments to permit an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the 'own use' scope exception

Agriculture - Amendments bringing bearer plants into the scope of IAS 16

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2018

January 01, 2016

3.4 Standards or interpretations not yet effective

The following new standards and interpretations have been issued by the International

Accounting Standards Board (IASB), which have not been adopted locally by the Securities

and Exchange Commission of Pakistan:

IFRS 1 First Time Adoption of International Financial Reporting Standards

IFRS 9 Financial Instruments

IFRS 14 Regulatory Deferral Accounts

IFRS 15 Revenue from Contracts with Customers

The Company expects that the adoption of the above amendments and interpretations of the

standards will not have any material impact and therefore will not affect the Company's

financial statements in the period of initial application.

Effective date

(annual periods

Beginning

on or after)

IFRS 9 Financial Instruments January 01, 2018

IFRS 14 Regulatory Deferral Accounts January 01, 2016

IFRS 15 Revenue from Contracts with Customers January 01, 2017

IFRIC 21 Levies January 01, 2014

The Company expects that the adoption of the above amendments and interpretations of the

standards will not have any material impact and therefore will not affect the Company's

financial statements in the period of initial application.

AN

NU

AL R

EP

OR

T

29

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

4 SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the presentation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

4.1 Property, plant and equipment

a) Owned assets

These are stated at cost / revalued amount less accumulated depreciation and accumulated impairment losses, if any, except capital work-in-progress which is stated at cost. Cost comprises of actual cost including, interest expense and trial run operational results.

Depreciation is charged on all fixed assets by applying the reducing balance method at the rates specified in note 5. The rates are determined to allocate the cost of an asset less estimated residual value, if not insignificant, over its useful life.

Depreciation on assets is charged from the month of addition while no depreciation is charged for the month in which assets are disposed off.

Maintenance and normal repairs are charged to income as and when incurred while cost of major replacements and improvements, if any, are capitalized.

Gains and losses on disposal and retirement of an asset are included in the profit and loss account.

b) Leased assets

Leases of property, plant and equipment where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Assets subject to finance lease are stated at the lower of present value of minimum lease payments under the lease agreement and the fair value of the assets acquired on lease. Outstanding obligations under the lease less finance charges allocated to future periods are shown as liability. Finance costs under lease agreements are allocated to the period during the lease term so as to produce a constant periodic rate of financial cost on the remaining balance of principal liability for each period.

Assets acquired under a finance lease are depreciated over the useful life of the asset on reducing balance method at the rates given in note 5. Depreciation on leased assets is charged to the profit and loss account.

Depreciation on additions to leased assets is charged from the month in which an asset is acquired while no depreciation is charged for the month in which asset is disposed off.

c) Capital work in progress

Capital work-in-progress represents expenditure on fixed assets in the course of construction and installation. Transfers are made to relevant fixed assets category as and when assets are available for use. Capital work-in-progress is stated at cost.

4.2 Intangible assets

Costs that are directly associated with identifiable software products controlled by the Company and have probable economic benefits beyond one year are recognized as intangible assets. These are stated at cost less accumulated amortization and impairment losses, if any. Amortization is provided on a straight line basis over the asset's estimated useful lives.

AN

NU

AL R

EP

OR

T

30

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

4.3 Goodwill

On acquisition of an entity, excess of the purchase consideration over the fair value of the identifiable assets and liabilities acquired is initially recognized as goodwill and thereafter tested for impairment annually. Subsequent to initial recognition goodwill is recognized at cost less impairment if any.

4.4 Investment property

Investment property is property which is held either to earn rental income or for capital appreciation or for both. Investment property is initially recognized at cost, being the fair value of the consideration given. Subsequent to initial recognition investment property is carried at fair value. The fair value is determined annually by an independent approved valuer. The fair values is based on market value being the estimated amount for which a property could be exchanged on the date of valuation between knowledgeable and willing buyer and seller in an arms length transaction.

Any gain or loss arising from a change in fair value is recognized in the income statement.

Rental income from investment property is accounted for as described in note 4.22.

When an item of property, plant and equipment is transferred to investment property following a change in its use, differences arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognized in surplus on revaluation of property, plant and equipment, if it is a gain. Upon disposal of the item the related surplus on revaluation of property, plant and equipment is transferred to retained earnings. Any loss arising in this manner is recognized immediately in the income statement.

For a transfer from inventories to investment property that will be carried at fair value any difference between the fair value of the property at that date and its previous carrying amount shall be recognized in the income statement.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its cost for accounting purposes.

4.5 Investments

Investment in associates

Investment in associates where the Company holds 20% or more of the voting power of the investee companies and where significant influence can be established are accounted for using the equity method. Investment in associates other than those described as above are classified as “available for sale”.

In case of investments accounted for under the equity method, the method is applied from the date when significant influence is established until the date when that significant influence ceases.

Investments in subsidiary

Investment in unquoted subsidiary is initially valued at cost. At subsequent reporting dates, the Company reviews the carrying amount of the investment to assess whether there is any indication that such investments have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss, if any.

AN

NU

AL R

EP

OR

T

31

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Available for sale investments

These are initially measured at cost, being the fair value of consideration given. At subsequent reporting dates, these investments are re-measured at fair value. For listed securities, fair value is determined on the basis of period end bid prices obtained from stock exchange quotations, while for unquoted securities, fair value is determined considering break up value of securities.

All purchases and sales of investments are recognized on the trade date which is the date that the Company commits to purchase or sell the investment. Cost of purchase includes transaction cost.

Changes in carrying value are recognized in equity until the investment is sold or determined to be impaired at which time the cumulative gain or loss previously recognized in equity is included in profit and loss account for the year.

4.6 Stores, spares and loose tools

These are valued at lower of moving average cost and net realizable value less impairment, if any, except for items in transit, which are valued at cost comprising of invoice value plus other charges paid thereon till the balance sheet date. The Company reviews the carrying amount of stores and spares on a regular basis and provision is made for obsolescence if there is any change in usage pattern and physical form of related stores, spares and loose tools. For items which are slow moving and / or identified as surplus to the company's requirements, adequate provision is made for any excess book value over estimated realisable value.

4.7 Stock-in-trade

These are valued at lower of cost and net realizable value. Cost is determined as follows:

Raw and packing - Weighted average costmaterialsRaw and packing - Invoice value plus other expenses incurred thereonmaterials in transitWork in process - Cost of material as above plus proportionate production overheadsFinished goods - Average cost of manufacture which includes proportionate

production overheads including duties and taxes paid thereon, if any.

Net realizable value represents the estimated selling prices in the ordinary course of business less expenses incidental to make the sale.

4.8 Trade debts and other receivables

Trade debts and other receivables are carried at original invoice amount being the fair value of amount to be received, less an estimate made for doubtful receivables based on review of outstanding amounts at the year end, if any. An estimate is made for doubtful receivables when collection of the amount is no longer probable. Debts considered irrecoverable are written off.

4.9 Taxation

a) Current

The charge for current year is higher of the amount computed on taxable income at the current rates of taxation after taking into account tax credits and rebates, if any, and minimum tax computed at the prescribed rate on turnover. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years.

AN

NU

AL R

EP

OR

T

32

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

b) Deferred

Deferred tax is provided using the liability method for all temporary differences at the balance sheet date between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In this regard, the effects on deferred taxation of the portion of income subject to final tax regime is also considered in accordance with the requirement of Technical Release - 27 of the Institute of Chartered Accountants of Pakistan.

Deferred tax asset is recognised for all deductible temporary differences and carry forward of unused tax losses, if any, to the extent that it is probable that taxable profit will be available against which such temporary differences and tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the assets are realised or the liabilities are settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is charged or credited to the profit and loss account, except in case of items charged or credited directly to equity in which case it is included in the statement of comprehensive income.

4.10 Borrowings

Loans and borrowings are recorded at the proceeds received. Financial charges are accounted for on accrual basis.

4.11 Trade and other payables

Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received.

4.12 Provisions

Provisions are recognized when the Company has a present, legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

4.13 Leases

Finance lease

Leases that transfer substantially all the risks and rewards incidental to ownership of an asset is classified as finance lease. Assets on finance lease are capitalised at the commencement of the lease term at the lower of the fair value of leased assets and the present value of minimum lease payments. Finance costs under lease arrangements are allocated to the periods during the lease term so as to produce a constant periodic rate of finance cost on the remaining balance of principal liability for each period.

Operating lease / Ijarah

Operating lease / ijarah in which a significant portion of the risks and rewards of ownership are retained by the lessor / Muj'ir (lessor) are classified as operating leases/Ijarah. Payments made during the period are charged to profit and loss on a straight-line basis over the period of the lease / Ijarah.

The SECP has issued directive (vide SRO 431(I)/2007 dated May 22, 2007) that Islamic Financial Accounting Standard 2 (IFAS-2) shall be followed in preparation of the financial statements by companies while accounting for Ijarah (Lease) transactions as defined by said Standard. The Company has adopted the above said standard.

AN

NU

AL R

EP

OR

T

33

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

4.14 Cash and cash equivalents

For the purposes of cash flow statement, cash and cash equivalents consist of cash in hand and balances with banks net of borrowings not considered as being in the nature of financing activities.

4.15 Dividend and appropriation to reserve

Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s financial statements in the period in which the dividends are approved.

4.16 Impairment

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying value exceeds recoverable amount, assets are written down to the recoverable amount.

4.17 Financial instruments

All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instrument. Any gains or losses on de-recognition of the financial assets and financial liabilities are taken to profit and loss account currently.

4.18 Offsetting of financial assets and financial liabilities

A financial asset and a financial liability is offset and the net amount is reported in the balance sheet if the Company has a legally enforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

4.19 Foreign currency transactions and translation

Transactions in foreign currencies are translated into Pak Rupees at the rates of exchange approximating those prevailing on the date of transactions or at the contract rate. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rates of exchange approximating those prevailing at the balance sheet date or at the contract rate. Exchange gains and losses are included in profit and loss account currently.

4.20 Staff retirement benefits

The Company operates an un-funded gratuity scheme for its permanent employees. Provision is based on actuarial valuation of the scheme carried out as at June 30, 2015 in accordance with IAS-19 "Employee Benefits" and the resulting vested portion of past service cost has been charged to income in the current year.

Actuarial gains and losses at each valuation date are charged to profit and loss account. Gratuity is payable to staff on completion of prescribed qualifying period of service under the scheme.

A recognized provident fund scheme is also in operation, which covers all permanent employees, who had not opted Voluntarily Separation Scheme / Golden Hand Shake Scheme announced at the time of privatization of the Company in 1995. The Company and the employees make equal contributions to the fund.

AN

NU

AL R

EP

OR

T

34

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

4.21 Compensated absences

The Company accounts for these benefits in the period in which the absences are earned.

4.22 Revenue recognition

Sales are recognized on dispatch of goods to customers.

Interest income is recognized on accrual basis.

Dividend on equity investments is recognized as income when the right to receive payment is established.

Rental income is recognized on accrual basis.

4.23 Related party transactions

Transactions with related parties are based on the policy that all transactions between the Company and the related parties are carried out at arm's length. The prices are determined in accordance with the methods prescribed in the Companies Ordinance, 1984.

4.24 Borrowing costs

Interest and commitment charges on long term loans are capitalized for the period up to the date of commencement of commercial production of the respective plant and machinery acquired out of the proceeds of such loans. All other interest and charges are treated as expenses during the year.

4.25 Segment reporting

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses including revenues and expenses that relate to transactions with any of the Company’s other components. All operating segments’ results are reviewed regularly by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company has only one reportable segment.

AN

NU

AL R

EP

OR

T

35

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

5 O

PE

RA

TIN

G F

IXE

D A

SS

ET

S

Th

e f

ollo

win

g is

th

e s

tate

me

nt

of

pro

pe

rty,

pla

nt

an

d e

qu

ipm

en

t:

Ne

t ca

rry

ing

va

lue

ba

sis

ye

ar

en

de

d J

un

e 3

0,

20

15

Op

en

ing

ne

t b

oo

k va

lue

(N

BV

)

Ad

dit

ion

s (a

t co

st)

Dis

po

sals

(N

BV

)

De

pre

cia

tio

n c

ha

rge

Clo

sin

g n

et

bo

ok

va

lue

Gro

ss c

arr

yin

g v

alu

e b

asi

sy

ea

r e

nd

ed

Ju

ne

30

, 2

01

5C

ost

Acc

um

ula

ted

de

pre

cia

tio

nN

et

bo

ok

va

lue

Ne

t ca

rry

ing

va

lue

ba

sis

ye

ar

en

de

d J

un

e 3

0,

20

14

Op

en

ing

ne

t b

oo

k va

lue

(N

BV

)A

dd

itio

ns

(at

cost

)D

isp

osa

ls /

tra

nsf

ers

(N

BV

)

De

pre

cia

tio

n c

ha

rge

C

losi

ng

ne

t b

oo

k v

alu

e

Gro

ss c

arr

yin

g v

alu

e b

asi

sy

ea

r e

nd

ed

Ju

ne

30

, 2

01

4C

ost

Acc

um

ula

ted

de

pre

cia

tio

nN

et

bo

ok

va

lue

2,4

84

,85

2

1,4

63

,83

0

(2,7

77

)

(19

0,0

79

)

3,7

55

,82

6

5,8

96

,22

6(2

,14

0,4

00

)3

,75

5,8

26

2,4

95

,97

61

71

,33

6(6

52

) (1

81

,80

8)

2,4

84

,85

2

4,4

39

,01

3(1

,95

4,1

61

)2

,48

4,8

52

2,4

84

,85

2

1,4

64

,20

2

(2,7

77

)

(19

0,0

98

)

3,7

56

,17

9

5,8

96

,59

8(2

,14

0,4

19

)3

,75

6,1

79

2,4

95

,97

61

71

,33

6(6

52

)(1

81

,80

8)

2,4

84

,85

2

4,4

39

,01

3(1

,95

4,1

61

)2

,48

4,8

52

De

pre

cia

tio

n r

ate

% p

er

an

nu

m

80

2,0

37

49

,52

9

- -

85

1,5

66

85

1,5

66

- 8

51

,56

6

80

2,0

07

30 - -

80

2,0

37

80

2,0

37

- 8

02

,03

7

-

71

,91

2

10

0,5

05

-

(8,1

63

)

16

4,2

54

27

3,2

73

(10

9,0

19

)1

64

,25

4

74

,12

65

,45

1-

(7,6

65

)7

1,9

12

17

2,7

68

(10

0,8

56

)7

1,9

12

10

2,7

14

- -

(27

1)

2,4

43

7,2

73

(4,8

30

)2

,44

3

3,0

16

- - (3

02

)

2,7

14

7,2

73

(4,5

59

)2

,71

4

10

1,5

39

,42

3

1,2

89

,56

5

-

(16

7,1

86

)

2,6

61

,80

2

4,5

50

,64

5(1

,88

8,8

43

)2

,66

1,8

02

1,5

49

,01

31

50

,12

7-

(15

9,7

17

)1

,53

9,4

23

3,2

61

,08

0(1

,72

1,6

57

)1

,53

9,4

23

10

20

,04

0

9,7

42

-

(3,9

52

)

25

,83

0

90

,35

3(6

4,5

23

)2

5,8

30

18

,46

24

,68

8 -

(3,1

10

)2

0,0

40

80

,61

1(6

0,5

71

)2

0,0

40

15

4,1

39

12

7

-

(42

3)

3,8

43

8,7

66

(4,9

23

)3

,84

3

3,3

49

1,2

07

- (4

17

)4

,13

9

8,6

39

(4,5

00

)4

,13

9

10

19

,76

5

72

9 -

(4,2

18

)

16

,27

6

51

,81

3(3

5,5

37

)1

6,2

76

22

,42

02

,51

3-

(5,1

68

)1

9,7

65

51

,08

4(3

1,3

19

)1

9,7

65

15

to

30

-

37

2 -

(19

)

35

3

37

2 (1

9)

3

53 - - - - - - - - 20

To

tal

Ve

hic

les

Gra

nd

to

tal

(Ru

pe

es

in t

ho

usa

nd

)

5.1

5.2

Bo

rro

win

g c

ost

ca

pit

alis

ed

du

rin

g t

he

ye

ar

am

ou

nte

d t

o N

il (2

01

4: R

s. 2

.55

8 m

illio

n)

at

an

ave

rag

e r

ate

of

Nil

(20

14

: 12

.68

%)

pe

r a

nn

um

.

Fre

eh

old

lan

dh

as

be

en

reva

lue

db

ya

nin

de

pe

nd

en

tva

lue

rM

/s.

Un

ico

rnIn

tern

ati

on

al

Serv

ice

sa

tJu

ne

30

,2

01

5o

nth

eb

asi

so

fm

ark

et

24

,82

2

13

,63

3

(2,7

77

)

(5,8

66

)

29

,81

2

62

,53

7(3

2,7

25

)2

9,8

12

23

,58

37

,32

0(6

52

) (5

,42

9)

24

,82

2

55

,52

1(3

0,6

99

)2

4,8

22

20

valu

e.

Ha

dth

ere

be

en

no

reva

lua

tio

no

nth

at

Da

te,

the

bo

ok

valu

e o

f o

pe

rati

ng

fix

ed

ass

ets

wo

uld

ha

ve b

ee

n lo

we

r b

y R

s. 7

94

.84

8 m

illio

n (

20

14

: Rs.

76

0.8

19

mill

ion

).

De

scri

pti

on

Fre

eh

old

la

nd

Le

ase

d

Ve

hic

le

Bu

ild

ing

s o

n

fre

eh

old

la

nd

Ra

ilw

ay

sid

ing

s

Pla

nt

an

d

ma

chin

ery

Oth

er

eq

uip

me

nts

Fu

rnit

ure

an

d

fix

ture

s

Off

ice

an

d

oth

er

eq

uip

me

nts

AN

NU

AL R

EP

OR

T

36

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

20142015

Note Rupees in thousand

5.3 The depreciation charge for the year

has been allocated as follows:

Cost of sales 31 175,474

Selling and distribution expenses 32 1,027

General and administrative expenses 33 5,307

181,808

183,817

1,240

5,041

190,098

5.4 The following operating fixed assets were disposed off during the year:

Accumu-

lated

depreciation

Net Book

valueSale

proceeds

Honda Civic AYP-017

Motor Cycle Unique KDD-1122

Cuore AUC-160

Honda Accord AQY-646

Honda Civic LEE-07-5842

Suzuki Alto ALE-619

Negotiated

Negotiated

Negotiated

Negotiated

Negotiated

Negotiated

2,472

35

767

1,430

1,404

509

6,617

3,129

755

28

467

1,008

1,144

438

3,840

2,477

1,717

7

300

422

260

71

2,777

652

2,035

17

715

1,074

350

400

4,591

2,414Total - 2014

Description Cost

(Rupees in thousand)

Total - 2015

Mode of

disposalParticulars of buyers

Mr. Atif-ud-Din

Mr. M. Abid

Mr. Jawad

M/S Kundan Automobiles

Mr. Sheikh Shoaib Khalid

M/S Kundan Automobiles

AN

NU

AL R

EP

OR

T

37

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

6 CAPITAL WORK IN PROGRESS

This comprises of:Building 2,255 Plant and machinery 369,621

371,876

6.1 Movement of carrying amount

Building Plant and Total

machinery

(Rupees in thousands)

Year ended June 30, 2015Opening balance 2,255 369,621 371,876Additions (at cost) 98,250 937,498 1,035,748 Transferred to operating fixed assets (100,505) (1,285,513) (1,386,018)Closing balance - 21,606 21,606

Year ended June 30, 2014Opening balance 858 18,975 19,833Additions (at cost) 6,848 447,614 454,462Transferred to operating fixed assets (5,451) (96,968) (102,419)Closing balance 2,255 369,621 371,876

6.2 Borrowing cost capitalised during the year amounted to Rs. 89.257 million (2014: Rs. 6.303 million) at an average rate of 10.57% (2014: 12.68%) per annum.

7 INTANGIBLE ASSETS

Computer software and licences 7.1 6,343 10,459 Goodwill 7.2 6,445 6,445

12,788 16,904

7.1 Computer software and licences

Net carrying value as at 1 JulyOpening balance as on July 01, 10,459 15,688 Amortization charge 33 (4,116) (5,229)Net book value as at June 30, 6,343 10,459

Gross carrying value as at 30 JuneCost 22,542 22,542 Accumulated amortization (16,199) (12,083)

Net book value 6,343 10,459

Amortization % per annum 33.33% 33.33%

The amortization charge for the year has been allocated as follows:

Administrative expenses 33 4,116 5,229

-21,60621,606

20142015

Note Rupees in thousand

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

38

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

7.2 Goodwill

This represents excess of the amount paid over fair value of net assets of subsidiary company (now merged with and into the Company) on its acquisition. The recoverable amount of goodwill was tested for impairment by allocating the amount of goodwill to respective assets on which it arose, based on value in use in accordance with IAS-36. The value in use calculations are based on cash flow projections. These are then extrapolated for a period of 5 years using a steady long term expected demand growth of 5 % p.a. and terminal value determined based on long term earning multiples. The cash flows are discounted using applicable discount rate. Based on this calculation no impairment is required to be accounted for against the carrying amount of goodwill.

8 INVESTMENT PROPERTY

Free hold land 8.1 82,800 82,800

8.1 The movement in this account is as follows:

Opening balance 73,800 Fair value gain on revaluation shown in "income statement" 9,000

82,800

This comprises commercial property that is free hold land held for capital appreciation. The carrying value of investment property is the fair value of the property as at June 30, 2015 as determined by approved independent valuer M/s Unicorn International Services. Fair value was determined having regard to recent market transactions for similar properties in the same location and condition.

9 LONG TERM INVESTMENTS

Investment in related party - unquoted Chemi Visco Fiber Limited

5,625,000 (2014: 5,625,000) fully paid ordinary shares 56,250 Less: Provision for diminution in value of investment 9.1 (56,250)Relevant information: Percentage of investment in equity held 7.91% (2014: 7.91%) (Chief Executive : Mr. Abdul Hai Khatri) -

9.1 This provision was made in earlier years as a matter of prudence since the project of the investee company is not operating and there is significant uncertainty regarding future earnings and related cash flows. Further, the financial statements of the entity indicate that the fair value of the net assets is negative.

10 LONG TERM DEPOSITS

Long term deposit 40,558

87,00087,000

82,8004,200

87,000

56,250

(56,250)

-

36,557

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

39

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

11 STORES, SPARES AND LOOSE TOOLS

Stores in hand 11.1 156,713 in transit -

156,713Spares: in hand 11.1 319,787 in transit 59,882

379,669536,382

Less: Provision for obsolete stores and spares 11.2 8,774527,608

11.1 Stores and spares also include items which may result in capital expenditure but are not distinguishable at the time of purchase.

11.2 Movement of provision for stores and spares is as follows:

Opening balance 16,674Adjustment on account of write off during the year (7,900)

8,774

12 STOCK IN TRADE

Raw materials: in hand 31 51,536 in transit 10,495

62,031Packing materials 12,648 Work in process 31 29,490Finished goods 12.1 & 31 179,702

283,871

12.1 These include provision for write down of finished goods inventory to net realisable value amounting to Rs. 0.876 million (2014: Nil).

13 TRADE DEBTS

Secured Considered good 127,380Unsecured Considered good 482,125 Considered doubtful 26,468

508,593 635,973

Less: Provision for doubtful debts 13.1 26,468609,505

143,0962,014

145,110

326,2045,836

332,040477,150

8,774468,376

8,774-

8,774

59,8421,853

61,69512,66225,66671,417

171,440

87,650

373,93944,323

418,262505,912

44,323461,589

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

40

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

13.1 Movement of provision for doubtful debts is as follows:

Opening balance 23,357 Adjustment on account of: Doubtful debts written off (200) Recovery of doubtful debts (170) Provision made for doubtful debts 3,481 Net adjustment 3,111Closing balance 26,468

14 LOANS AND ADVANCES

Advances - (considered good) Against purchase of land 1,639 To employees 15,123 For supplies and services 56,576 Against import 413

73,751

15 TRADE DEPOSITS AND SHORT TERM PREPAYMENTS

Trade deposits - (Considered good) 4,195Prepayments 3,024

7,219

16 TAX REFUNDS DUE FROM GOVERNMENT

(Considered good) Income tax 10,325 Sales tax 20,820

31,145

17 TAXATION - NET

Advance income tax 114,609Less: Provision for taxation 88,398

26,211

18 CASH AND BANK BALANCES

Cash in hand 684 Cheques in hand 138,669Cash at banks Current accounts 5,471 Saving accounts 18.1 200

5,671145,024

18.1 The balance in saving accounts carries mark up of Nil (2014: 5% to 6% per annum).

26,468

(715)(633)

19,20317,85544,323

1,63914,76164,089

14680,635

5,5362,2307,766

13,07430,02243,096

85,361481

84,880

414112,052

6,924-

6,924119,390

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

41

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

19 SHARE CAPITAL

19.1 Authorized share capital

75,000,000 Ordinary shares of Rs. 10/- each 750,00025,000,000 Preference shares of Rs. 10/- each 250,000

100,000,000 1,000,000

19.2 Issued, subscribed and paid up capital

100,000 Fully paid in cash 1,000 24,900,000 Issued for consideration

other than cash 249,00025,000,000 Fully paid bonus shares 250,000

50,000,000 500,000

20 SURPLUS ON REVALUATION OF FIXED ASSETS

Opening balance 760,819 Revaluation surplus arising during the year 20.1 -

760,819

20.1 This amount represents surplus arising on the revaluation of freehold land carried out on June 30, 2015 by an independent valuer M/s. Unicorn International Services on the basis of market value.

75,000,000 750,00025,000,000 250,000

100,000,000 1,000,000

100,000 1,00024,900,000

249,00025,000,000 250,000

50,000,000 500,000

760,81934,029

794,848

20142015

Note Rupees in thousand

2015 2014

Number of ordinaryshares of Rs. 10/- each

2015 2014

Number of ordinaryshares of Rs. 10/- each

AN

NU

AL R

EP

OR

T

42

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

21 LONG TERM FINANCING

Secured: Banking Companies The Bank of Punjab 18,750 The Bank of Punjab 21.1 -

18,750

Other Financial Institutions Pak Kuwait Investment Company (Private) Limited 5,556 Pak Brunei Investment Company Limited 21.2 18,750 Saudi Pak Industrial & Agricultural Investment Company Limited 21.3 33,333 Pak Kuwait Investment Company (Private) Limited 21.4 117,000 Pak Libya Holding Company (Private) Limited 21.5 100,000 Pak Brunei Investment Company Limited 21.6 -

274,639

Unsecured: Ittehad developers - related party 21.7 660 Others 21.7 4,150

4,810298,199

Less: Current portion shown under current liabilities 28 89,838208,361

21.1 This finance is secured against first pari passu charge over fixed assets of the Company and carries mark up at six months average KIBOR plus 2% per annum to be recovered on quarterly basis. The loan was disbursed in different trunches starting from October 2014 and is repayable in sixteen quarterly equal instalments after one year grace period starting from the first drawdown.

21.2 This finance is secured against first pari passu charge on all present and future fixed assets of the Company with 25% margin and carries mark up at six months average KIBOR plus 3% per annum. This loan was disbursed in September 2010 and is repayable in eight semi annually equal instalments commencing from March 2012.

21.3 This finance is secured against first pari passu charge on all present and future fixed assets of the Company with 25% margin and carries mark up at three months average KIBOR plus 3% per annum. This loan was disbursed in December 2010 and is repayable in eighteen quarterly equal instalments commencing from September 2011.

21.4 This finance is secured against first pari passu charge on all present and future fixed assets of the Company with 25% margin and carries mark up at six months KIBOR plus 2.5% per annum. This loan was disbursed in October 2013 and is repayable in eighteen quarterly equal instalments commencing from January 2014 with a principal grace period of six months.

-185,992185,992

-6,250

11,111

91,000200,000100,000

408,361

6604,1504,810

599,163

208,885390,278

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

43

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

21.5 This finance is secured against first pari passu charge by way of hypothecation on all present and future moveable and immovable fixed assets (other than land & building) of the Company with 25% margin and carries mark up at six months average KIBOR plus 2.5% per annum. This loan was disbursed in March 2014 and November 2014. The loan is repayable in seven semi annual equal instalments commencing from 24th month from the date of first disbursement with a principal grace period of one and half year.

21.6 This finance is secured against hypothecation / mortgage charge over all present and future fixed assets of the Company with 25% margin and carries mark up at six months average KIBOR plus 1.85% per annum . The loan was disbursed in January 2015 and is repayable in seven equal semiannual instalments commencing from January 2016.

21.7 These are interest free loans and repayable in a period of 2 years starting from July 2009.

22 LONG TERM DIMINISHING MUSHARAKA

Secured Banking Companies Al-Baraka Bank (Pakistan) Limited 22.1 155,630 Burj Bank Limited 22.1 209,956

365,586

Less: Current portion shown under current liabilities 28 - 365,586

22.1 The above finances are secured against first exclusive charge over imported Plant and Machinery and first pari passu charge over present and future fixed assets of the Company and carries mark up at six months average KIBOR plus 2.50% per annum. These finances were disbursed from June, 2014 to February, 2015 in different trunches and are repayable in eight semi annual equal instalments commencing from 18th months from the first draw down date inclusive of initial one year grace period for principal payment.

23 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Secured Balance as on July 01 - Addition during the year -

- Payments / adjustments during the year - Current portion shown under current liabilities -

--

The minimum lease payments have been discounted at an implicit interest rate of 14.45% to arrive at their present value. Rentals are paid in monthly installments .

Taxes, duties, registration costs, charges, levy / penalties, if any applicable and insurance costs are to be borne by the Company.

206,282278,290484,572

123,697360,875

-372372(33)

(143)(176)

196

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

44

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

The amount of future payments of the lease and the period in which these payments will become due are as follows:

Upto One to Total Total

One Year Five Years 2015 2014

(Rupees in thousands)

Minimum lease payments outstanding 183 214 - Less: Finance charges not yet due (40) (18) -Present value of minimum leasepayments 143 196 -Less: Current portion shown undercurrent liabilities (143) - -

- 196 -

24 DEFERRED LIABILITIES

Provision for recoating of DSA anodes 24.1 - Deferred taxation 24.2 292,277 Provision for gratuity 24.3 43,029

335,306

24.1 Provision for Dimensionally Stable Anodes (DSAs)

Balance brought forward 12,476Provision (utilized) / made for recoating (10,446)

2,030Less: Current portion included in accrued liabilities (2,030)

-

24.2 Deferred taxation

Deferred tax liability comprises as follows: Taxable temporary differences Tax depreciation allowances 314,474

Deductible temporary differences Provision for gratuity (13,198) Provision for doubtful debts (8,999) Tax losses - Tax credits -

292,277

397(58)

339

(143)196

-131,921

49,861181,782

12,476(10,446)

2,030(2,030)

-

412,647

(14,418)(14,183)

(123,168)(128,957)

131,921

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

45

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

24.3 DEFINED BENEFIT PLAN

a. General description

The scheme provides for terminal benefits for all its permanent employees who qualify for the scheme. The defined benefit payable to each employee at the end of his service comprises of total number of years of his service multiplied by last drawn basic salary including cost of living allowance.

Annual charge is based on actuarial valuation carried out by an independent approved

valuer M/S Nauman Associates as at June 30, 2015 using the Projected Unit Credit

method.

The Company faces the following risks on account of gratuity:

Final salary risk - The risk that the final salary at the time of cessation of service is greater

than what the Company has assumed. Since the benefit is calculated on the final salary,

the benefit amount would also increase proportionately.

Asset volatility - Most assets are invested in risk free investments i.e. Government Bonds

/ Treasury bills. However, investments in equity instruments is subject to adverse

fluctuations as a result of change in the market price.

Discount rate fluctuation - The plan liabilities are calculated using a discount rate set

with reference to corporate bond yields. A decrease in corporate bond yields will

increase plan liabilities, although this will be partially offset by an increase in the value

of the current plans’ bond holdings.

Investment risks - The risk of the investment underperforming and not being sufficient

to meet the liabilities. This risk is mitigated by closely monitoring the performance of

investment.

Risk of insufficiency of assets - This is managed by making regular contribution to the

Fund as advised by the Actuary.

b. Significant actuarial assumptions

Following are significant actuarial assumptions used in the valuation:

Discount rate 9.75% per annum

Expected rate of increase in salary 8.75% per annum

c. Reconciliation of payable to defined benefit plan

Present value of obligation 43,029

Liability recognized in balance sheet 43,029

49,861

49,861

20142015

Rupees in thousand

AN

NU

AL R

EP

OR

T

46

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

d. Movement of liability recognized in the

balance sheet

Present value of obligation at the start of the year 35,001

Current service cost 11,835

Interest cost -

Benefits due but not paid -

Experience adjustment -

Contribution paid to outgoing employees (3,807)

Closing net liability 43,029

e. Charge for the year

Current service cost 11,835

Interest cost -

Charge for the year 11,835

f. As per actuarial estimates, the charge in respect of defined benefit plan for the year

ending June 30, 2016 would be Rs. 13.803 million.

g. Sensitivity analysis

The impact of 1% change in following variables on defined benefit obligation is as

follows:

Discount rate 54,208

Salary increase 45,929

h. The average duration of the defined benefit obligation is 12 years.

43,029

8,453

4,429

(79)

(4,358)

(1,613)

49,861

8,453

4,429

12,882

46,067

54,289

20142015

Rupees in thousand

Increase inassumption

Decrease inassumption

AN

NU

AL R

EP

OR

T

47

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

25 TRADE AND OTHER PAYABLES

Trade creditors 64,447

Accrued liabilities 25.1 & 25.2 300,518

Advances from customers 48,282

Retention money 1,332

Income tax deducted at source 499

Workers' Profit Participation Fund 25.3 15,402

Workers' Welfare Fund 6,193

Other liabilities 236

436,909

25.1 These include a balance due to Chemi Multifabrics Limited, other related party, amounting to

Rs. 11.017 million (2014: Rs. 0.464 million).

25.2 This also includes an amount of Rs. 232.195 million payable in respect of Gas Infrastructure

Development Cess. The Government has promulgated the Gas Infrastructure Development

Cess Act, 2015 (the Act) in May 2015 for henceforth levying / collecting of GIDC and also

validating GIDC payable under the Ordinance (repealed). The Company has filed writ petition

against the Act and the High Court has granted stay order against collecting GIDC under the

Act pending the final decision on the writ petition. As the matter relating to levy of GIDC is

currently pending in the Court, the Company, as a matter of prudence and abundant caution,

has recorded a provision against GIDC as liability.

25.3 Workers' profit participation fund balances comprises as follows:

Balance as at July 01, 18,405

Less: Amount paid to fund 17,653

752

Current year's allocation at 5% 34 14,650

15,402

The Company retains the allocation of this fund for its business operations till the amounts are

paid.

26 MARK UP ACCRUED

Secured

Long term financing 7,593

Long term diminishing musharaka 3,107

Short term borrowings 22,581

33,281

177,176

576,012

41,724

5,521

-

866

-

292

801,591

15,402

14,536

866

-

866

17,145

15,445

15,486

48,076

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

48

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

27 SHORT TERM BORROWINGS

Secured

Banking companies

Running finances

MCB Bank Limited 27.1 78,310

Askari Bank Limited 27.1 221,547

The Bank of Punjab Limited 27.1 94,822

KASB Bank Limited 27.1 9,861

NIB Bank Limited 27.1 294,604

699,144

Export refinance

KASB Bank Limited (ERF) 9,253

Term finance

The Bank of Punjab Limited (FATR) 27.2 26,272

Faysal Bank Limited (STF) 27.2 40,000

Al-Baraka Bank (Pakistan) Limited (STMF) 27.2 32,453

Burj Bank Limited (STMF) 27.2 100,000

Dubai Islamic Bank (Pakistan) Limited 27.2 -

Bank Al-Falah Limited 27.2 -

198,725

Unsecured - Related party

Jehlum Silk Mills 27.3 23,500

MM Textile Processing 27.3 -

930,622

27.1 Short term running finance facilities from various banks aggregated to Rs. 790 million (2014:

Rs. 820 million) and carries mark-up ranging from three months KIBOR plus 1.25% to 1.9% per

annum (2014: three months KIBOR plus 1.5% to 2.75% per annum) on utilized limits. These

facilities are secured against first pari passu charge over present and future current assets of

the Company and hypothecation charge over stores, spares and stocks of chemicals.

27.2 Term finance facilities from various banks aggregated to Rs. 675 million (2014: Rs. 265 million)

and carries mark-up ranging from KIBOR plus 1.35% to 2.5% per annum (2014: KIBOR plus 2%

to 2.5% per annum) on utilized limits. These facilities are secured against first pari passu charge

over present and future current assets of the Company.

27.3 These are interest free loans obtained from associated undertakings for working capital needs.

20,829

246,428

125,832

-

132,739

525,828

-

-

-

49,296

-

65,407

158,711

273,414

53,500

10,000

862,742

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

49

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

28 CURRENT PORTION OF LONG TERM LIABILITIES

Long term financing 21 89,838

Long term diminishing musharaka 22 -

Liabilities against asset subject to finance lease 23 -

89,838

29 CONTINGENCIES AND COMMITMENTS

29.1 Contingent liabilities

a) The Company has received an order under section 161/205 of the Income Tax Ordinance,

2001 for tax year 2004 creating demand of Rs. 12.069 million (June 30, 2014: Rs. 12.069

million). The Company challenged it before Commissioner of Inland Revenue (Appeals) Zone-

1 who decided the case in favour of the Company. The department had filed an appeal before

Appellate Tribunal Inland Revenue. The Hon’ble ATIR (Appellate Tribunal Inland Revenue)

remanded the case back to the Commissioner (Appeals) Zone-1 to pass a speaking order. The

Company expects a favorable outcome of the proceedings. However, if the case is decided

against the Company, it may result in tax payable of Rs. 12.069 million.

b) The taxation authorities have amended the deemed assessment for tax year 2006 by passing

an order u/s 122(5A) of the Income Tax Ordinance, 2001. The Company challenged the same

before Commissioner Inland Revenue (Appeals) who partially set aside and partially decided

against the Company. The Company has filed an appeal before Appellate Tribunal Inland

Revenue against the said order. The Company expects a favorable outcome of the

proceedings. However, if the case is decided against the Company, it may result in tax payable

of Rs. 18.737 million.

c) Additional Commissioner has passed an order u/s 122(5A) of the Income Tax Ordinance,

2001 adding back tax credit u/s 65B of the Income Tax Ordinance, 2001 on Balancing,

Modernization, and Replacement and tax credit on donations for tax year 2012. Tax

amounting to Rs. 12.570 million has been assessed. The Company has challenged the case

before Commissioner Inland Revenue (Appeals) who has decided it against us. The Company

has filed appeal before Appellate Tribunal Inland Revenue. The Company expects a favorable

outcome of the proceedings. However, if the case is decided against the Company, it may

result in tax payable of Rs. 12.570 million.

d) The Company is facing claims, launched in the labour courts, pertaining to staff retirement

benefits. In the event of an adverse decision, the Company would be required to pay an

amount of Rs. 3.407 million (2014: Rs. 4.219 million) against these claims.

e) Letters of guarantee outstanding as at June 30, 2015 were Rs. 226.613 million (2014: Rs.

213.007 million).

208,885

123,697

143

332,725

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

50

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

29.2 Commitments

Commitments as on June 30, 2015 were as follows:

a) Against letters of credit amounting to Rs. 139.733 million (2014: Rs. 133.680 million).

b) Against purchase of land amounting to Rs. 1.838 million (2014: Rs. 1.838 million).

c) The Company had entered into Ijarah arrangement with Burj Bank Limited and United

Bank Limited - Ameen for Plant and Machinery. Commitment of Ijarah rentals under

these agreements are as follows:

Not later than one year 34,901

Later than one year and not later than five year 14,528

49,429

30 SALES

Sales

Manufacturing 30.1 4,736,749

Trading 48,715

4,785,464

Less: Sales tax 635,029

Commission to selling agents 46,582

681,611

4,103,853

30.1 This amount includes export sales amounting to Rs. 424.152 million (2014: Rs. 401.735

million).

14,528

-

14,528

4,674,917

39,119

4,714,036

624,608

43,891

668,499

4,045,537

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

51

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

31 COST OF SALES

Raw materials consumed

Opening stock 65,656

Purchases 343,086

408,742

Closing stock 12 (51,536)

357,206

Stores, spares and consumables 353,026

Packing materials consumed 39,880

Salaries, wages and other benefits 31.1 320,252

Fuel and power 1,922,043

Repair and maintenance 32,668

Rent, rates and taxes 31.2 46,469

Insurance 11,397

Depreciation 5.3 175,474

Vehicle running expenses 20,911

Telephone, telex and postage 741

Printing and stationery 222

Other expenses 2,353

2,925,436

Work in process

Opening 25,250

Closing 12 (29,490)

(4,240)

Cost of goods manufactured 3,278,402

Cost of stores traded 35,928

Finished goods

Opening 156,198

Closing 12 (179,702)

(23,504)

3,290,826

31.1 This amount includes Rs. 10.046 million (2014: Rs. 12.642 million) in respect of employees'

retirement benefits.

31.2 This amount includes Rs. 34.900 million (2014: Rs. 45.909 million) in respect of operating lease

rentals.

51,536

391,393

442,929

(59,842)

383,087

230,190

34,544

343,978

2,207,689

31,278

35,649

12,681

183,817

17,815

803

158

1,876

3,100,478

29,490

(25,666)

3,824

3,487,389

26,925

179,702

(71,417)

108,285

3,622,599

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

52

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

32 SELLING AND DISTRIBUTION EXPENSES

Salaries and other benefits 32.1 26,347

Travelling and conveyance 1,858

Vehicle running expenses 1,290

Advertisement 1,070

Telephone, telex and postage 1,139

Marketing service charges 29,664

Freight 161,436

Rent, rates and taxes 2,445

Printing and stationery 290

Fee and subscription 661

Fuel and power 2,726

Repair and maintenance 1,257

Insurance 469

Depreciation 5.3 1,027

231,679

32.1 This amount includes Rs. 0.906 million (2014: Rs. 0.832 million) in respect of employees'

retirement benefits.

33 GENERAL AND ADMINISTRATIVE EXPENSES

Salaries and other benefits 33.1 83,428

Traveling and conveyance 13,895

Vehicle running expenses 5,442

Telephone, telex and postage 1,659

Rent, rates and taxes 5,365

Printing and stationery 1,008

Fee and subscription 3,311

Legal and professional charges 9,826

Fuel and power 4,124

Provision for doubtful debts 3,481

Repair and maintenance 9,520

Depreciation 5.3 5,307

Amortization of intangible assets 7 5,229

Bad debts written off 1,524

Donations 33.2 8,242

Other expenses 2,145

163,506

33.1 This amount includes Rs. 2.751 million (2014: Rs. 2.528 million) in respect of employees'

retirement benefits.

27,803

871

1,939

878

1,071

18,162

186,717

2,747

290

762

2,192

448

624

1,240

245,744

83,605

10,729

5,725

1,817

6,037

652

2,499

3,457

3,755

19,203

3,093

5,041

4,116

1,008

6,772

2,007

159,516

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

53

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

33.2 Donations

33.2.1 Interest of the Directors or their spouses in the donations made during the year is as follows:

Donation amounting to Rs. 1.800 million (2014: Rs. 1.775 million) paid to Kiran Ibtadai School.

Ms. Sabina Khatri w/o Mr. Muhammad Siddique Khatri, Chairman of the Company is the

patron of the school.

33.2.2 Donations other than mentioned above were not made to any donee in which any director of

the Company or his spouse had any interest at any time during the year.

34 OTHER OPERATING EXPENSES

Auditors' remuneration

Audit fee 600

Half yearly review fee 175

Tax and certification charges 50

Out of pocket expenses 14

839

Workers' profit participation fund 25.3 14,650

Workers' welfare fund 6,193

Loss on foreign exchange 1,088

22,770

35 OTHER INCOME

Income from financial assets

Return on saving accounts 53

Gain on foreign exchange -

53

Income from non- financial assets

Gain on sale of fixed assets 1,762

Sale of scrap 7,807

Recovery of doubtful debts 678

10,247

10,300

36 FINANCIAL CHARGES

Mark-up/interest on:

Long term financing 22,889

Long term diminishing musharaka 1,389

Long term murabaha 648

Interest on lease finance -

Short term borrowings 97,176

122,102

Bank charges and commission 11,120

133,222

600

175

-

12

787

-

-

-

787

4

4,520

4,524

1,814

6,994

546

9,354

13,878

20,579

-

-

13

79,866

100,458

8,428

108,886

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

54

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

37 TAXATION

Current 91,929

Prior year (10,517)

Deferred tax income due to reversal of temporary differences (638)

Deferred tax income resulting from reduction in tax rate -

80,774

37.1 Relationship between tax expense and accounting profit:

(Loss) / profit before taxation 281,150

Tax at the applicable rate of 33% (2014: 34%) 95,591

Tax effect of inadmissible expenses / losses 72,045

Tax effect of admissible expenses (59,585)

Income taxed at different rates 1,243

Prior year adjustment (10,517)

Tax effect of losses and other allowances (17,365)

Effect of temporary differences (638)

Effect of reduction in tax rate -

80,774

37.2 In view of tax loss for the year, provision for current year represents minimum tax payable

under section 113 of the Income Tax Ordinance, 2001.

37.3 The rate of tax has been changed by taxation authorities from 34% to 33% for the Tax Year

2015 and 32% for Tax Year 2016.

38 ACCOUNTING ESTIMATES AND JUDGMENTS

The Company's main accounting policies affecting its result of operations and financial conditions are

set out in note 4. Judgments and assumptions have been required by the management in applying

the Company's accounting policies in many areas. Actual results may differ from estimates calculated

using these judgments and assumptions. Key sources of estimation, uncertainty and critical

accounting judgments are as follows:

Income taxes

The Company takes into account relevant provisions of the current income tax laws while providing

for current and deferred taxes as explained in note 4.9 to these financial statements.

Defined benefit plan

Certain actuarial assumptions have been adopted by external professional valuer (as disclosed in note

24.3) for valuation of present value of defined benefit obligations. Any changes in these assumptions

in future years might affect unrecognized gains and losses in those years.

4,638

(1,428)

(153,018)

(8,596)

(158,404)

(73,916)

-

-

-

4,638

(1,428)

-

(153,018)

(8,596)

(158,404)

20142015

Note Rupees in thousand

AN

NU

AL R

EP

OR

T

55

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Property, plant and equipment

The estimates for revalued amounts, if any, of different classes of property, plant and equipment, are

based on valuation performed by external professional valuers and recommendation of technical

teams of the Company. Further, the Company reviews the value of the assets for possible impairment

on an annual basis. Any change in the estimates in future years might affect the carrying amounts of

the respective items of property, plant and equipment with a corresponding effect on the

depreciation charge and impairment. As explained in note 20 to these financial statements, the

Company has revalued its free hold land as on June 30, 2015.

39 DEFINED CONTRIBUTION PLAN

The Company has contributory provident fund scheme for benefit of all its permanent employees,

who had not opted Voluntarily Separation Scheme / Golden Hand Shake Scheme announced at the

time of privatization of the Company in 1995, under the title of "Ittehad Chemicals Limited - Employees

Contributory Provident Fund". The Fund is maintained by the Trustees and all decisions regarding

investments and distribution of income etc. are made by the Trustees independent of the Company.

The Trustees have intimated that the size of the Fund at year end was Rs. 5.068 million (2014: Rs. 4.050

million).

The cost / fair value of the investments was Rs. 3.995 million at that date. The category wise break up

of investment as per section 277 of the Companies Ordinance, 1984 is given below:

Deposit in Scheduled banks 49

Investment in PIB 51

100

40 EARNINGS PER SHARE - BASIC AND DILUTED

There is no dilutive effect on the basic earnings per share of the Company, which is based on:

Profit after taxation - (Rupees in thousand) 200,376

Weighted average number of ordinary shares - (in thousand) 50,000

Earnings per share - (Rupees) 4.01

1,947

2,048

3,995

84,487

50,000

1.69

Rupees inthousand

20142015

Rupees in thousand

Percentage

AN

NU

AL R

EP

OR

T

56

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

41 TRANSACTIONS WITH RELATED PARTIES

INCLUDING ASSOCIATED UNDERTAKINGS

The related parties comprise of related group companies, local associated companies, staff retirement

funds, directors and key management personnel. Transactions with related parties and remuneration

and benefits to key management personnel under the terms of their employment are as follows:

Transactions with related parties

Relation with the Company Nature of transaction

Other related party Marketing service charges 29,664

Other related party Loan received 50,000

Staff retirement fund Contribution to staff retirement 296

Directors and employees Remuneration to directors and

key management personnel 78,005

Key management personnel Sale of vehicle 1,603

The balances with related parties have been disclosed in the relevant notes to the financial statements.

42 FINANCIAL INSTRUMENTS

Financial risk management

The Company has exposures to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

The Board of Directors has overall responsibility for the establishment and oversight of Company's risk

management framework. The Board is also responsible for developing and monitoring the

Company's risk management policies.

18,162

50,000

340

79,744

-

20142015

Rupees in thousand

AN

NU

AL R

EP

OR

T

57

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

42.1 Credit risk

Credit risk represents the accounting loss that would be recognized at the reporting date if the

counter party fail completely to perform as contracted and arise principally from trade debts,

loans and advances, trade deposits, other receivables and bank balances. The carrying

amount of financial assets represents the maximum credit exposure before any credit

enhancements. The maximum exposure to credit risk at the reporting date is as follows:

Long term deposits 40,558

Trade debts - net of provision 609,505

Loans and advances - net of provision 15,123

Trade deposits 4,195

Bank balances 144,340

To manage exposure to credit risk in respect of trade receivables, management performs

credit reviews taking into account the customer's financial position, past experience and other

factors. Credit terms are approved by the approval committee. Where considered necessary,

advance payments are obtained from certain parties. The management has set a maximum

credit period of 30 days to reduce the credit risk.

Concentration of credit risk arises when a number of counter parties are engaged in similar

business activities or have similar economic features that would cause their abilities to meet

contractual obligation to be similarly effected by the changes in economic, political or other

conditions. The Company believes that it is not exposed to major concentration of credit risk.

36,557

461,589

14,761

5,536

118,976

20142015

Rupees in thousand

AN

NU

AL R

EP

OR

T

58

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

The maximum exposure to credit risk for trade debts at the balance sheet date by geographic

region is as follows:

Export 132,495

Domestic 477,010

609,505

The maximum exposure to credit risk for trade debts at the balance sheet date by type of

customer is as follows:

Dealers 171,486

End-user customers 438,019

609,505

The aging of trade receivable at the reporting date is:

Not past due 297,870

Past due 1-30 days 128,492

Past due 30-150 days 96,351

Past due more than 150 days 86,792

609,505

The Company's most significant customers, are dealers from whom the receivable was Rs.

133.855 million (2014: Rs. 171.486 million) and foreign debtors amounting to Rs. 92.764

million (2014: Rs. 132.495 million) of the total carrying amount as at June 30, 2015.

Based on the past experience, consideration of financial position, past track records and

recoveries, the Company believes that no impairment allowance is necessary in respect of

trade debtors past due as some receivables have been recovered subsequent to the year end

and for other receivables there are reasonable ground to believe that the amounts will be

recovered in short course of time.

On the prudence basis an amount of Rs. 19.203 million (2014: Rs. 3.481 million) has been

charged, as provision for doubtful debts, to profit and loss account.

92,764

368,825

461,589

133,855

327,734

461,589

242,713

90,121

71,314

57,441

461,589

20142015

Rupees in thousand

AN

NU

AL R

EP

OR

T

59

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Company's bank balances can be assessed with reference to external credit ratings as follows:

Ratings

Rating Short Long

Agency Term Term

Al-Baraka Bank (Pakistan) Limited PACRA A1 A

Allied Bank Limited PACRA A1+ AA+

Askari Bank Limited JCR-VIS A-1+ AA

Bank Al-falah Limited PACRA A1+ AA

Burj Bank Limited JCR-VIS A A-

Dubai Islamic Bank (Pakistan) Limited JCR-VIS A-1 A+

Faysal Bank Limited PACRA A1+ AA

Habib Metropolitan Bank Limited PACRA A1+ AA+

MCB Bank Limited PACRA A1+ AAA

National Bank of Pakistan PACRA A1+ AAA

NIB Bank Limited PACRA A1+ AA-

Samba Bank Limited JCR-VIS A-1 AA

Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA

The Bank of Punjab PACRA A1+ AA-

United Bank Limited JCR-VIS A-1+ AA+

42.2 Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as

they fall due. The company's approach to managing liquidity is to ensure as far as possible to

always have sufficient liquidity to meet its liabilities when due, under both normal and stressed

conditions, without incurring unacceptable losses or risking damage to the Company's

reputation.

Carrying

amount

Six months

or less

Six to

twelve

months

One to two

years

Two to five

years

599,163

484,572

759,001

48,076

862,742

2,753,893

298,199

365,586

366,533

33,281

930,622

1,994,221

756,468

630,325

397

759,001

48,076

876,609

3,070,876

384,283

516,006

366,533

33,281

957,701

2,257,804

62,887

95,142

92

759,001

48,076

876,609

1,841,807

70,727

23,141

366,533

33,281

957,701

1,451,383

115,320

91,139

92

-

-

-

206,551

51,202

23,141

-

-

-

74,343

206,210

170,274

213

-

-

-

376,697

81,971

134,787

-

-

-

216,758

372,051

273,770

-

-

-

-

645,821

180,383

334,937

-

-

-

515,320

Contractual

cash flow

-----------------------------------------------------(Rupees in thousand)-----------------------------------------------------

2015

Financial liabilities

Long term financing

Trade and other payables

Mark-up accrued

Short term borrowing

2014

Long term financing

Trade and other payables

Mark-up accrued

Short term borrowing

Long term diminishing

musharaka

Liabilities against assets

subject to finance lease

Financial liabilities

Long term diminishing

musharaka

AN

NU

AL R

EP

OR

T

60

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

339

20142015

Rupees in thousand

42.3 Market risk

Market risk is the risk that the value of the financial instrument may fluctuate as a result of

changes in market interest rates or the market price due to a change in credit rating of the

issuer or the instrument, change in market sentiments, speculative activities, supply and

demand of securities, and liquidity in the market. The company is exposed to currency risk

and interest rate risk only.

42.4 Currency risk

The Company is exposed to currency risk on trade debts, import of raw materials and stores

and spares and export sales that are denominated in a currency other than the respective

functional currency of the Company, primarily in U.S. dollar. The Company's exposure to

foreign currency risk is as follows:

Trade debts 132,495

Gross balance sheet exposure 132,495

Outstanding letters of credit (133,680)

Net exposure (1,185)

The following significant exchange rates applied during the year:

Average rate Reporting date rate

2014 2014

USD to PKR 98.78 98.75

Sensitivity analysis

At reporting date, if the PKR had strengthened by 10% against the US dollar with all other

variables held constant, post tax profit for the year would have been lower by the amount

shown below.

Effect on profit or loss

Loss (13,250)

The weakening of the PKR against US dollar would have had an equal but opposite impact

on the post tax profits / loss.

92,764

92,764

(139,733)

(46,969)

2015 2015

100.23 101.70

(9,276)

AN

NU

AL R

EP

OR

T

61

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

42.5 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. Majority of the interest rate exposure

arises from long term loans and short term borrowings. These are benchmarked to variable

rates which expose the Group to cash flow interest rate risk. At the balance sheet date the

interest rate profile of the Group's interest -bearing financial instruments is as follows:

Financial liabilities

Variable rate instruments:

Long term loans 293,389

Long term diminishing musharaka 365,586

Liabilities against assets subject to finance lease -

Short term borrowings 907,122

1,566,097

Effective interest rates are mentioned in the respective notes to the financial statements.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have decreased /

(increased) loss for the year by the amounts shown below. This analysis assumes that all other

variables, in particular foreign currency rates, remain constant. The analysis is performed on

the same basis for 2014.

As at June 30, 2015

Cash flow sensitivity - Variable rate financial liabilities 18,785

As at June 30, 2014

Cash flow sensitivity - Variable rate financial liabilities 15,661

The sensitivity analysis prepared is not necessarily indicative of the effects on (loss) / profit for

the year and assets / liabilities of the Company.

42.6 Fair value of financial instruments

The carrying value of all the financial assets and financial liabilities approximate their fair

values. Fair value is the amount for which an asset could be exchanged, or a liability settled,

between knowledgeable, willing parties in an arm's length transaction.

594,353

484,572

339

799,242

1,878,506

(18,785)

(15,661)

20142015

Carrying amountRupees in thousand

Profit and loss

100 bpIncrease

100 bpdecrease

AN

NU

AL R

EP

OR

T

62

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

20142015

Note Rupees in thousand

42.7 Financial instruments by category

Financial assets

Loans and receivables at cost or amortised cost

Long-term deposits 40,558

Trade debts 609,505

Loans and advances 15,123

Trade deposits 4,195

Cash and bank balances 145,024

814,405

Financial liabilities

Financial liabilities at amortised cost

Long term financing 298,199

Long term diminishing musharaka 365,586

Liabilities against assets subject to finance lease -

Trade and other payables 366,533

Mark-up accrued 33,281

Short-term borrowings 930,622

1,994,221

43 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

The aggregate amount charged in the financial statements for the year for remuneration, including

all benefits, to the Chief Executive, Directors and Executives of the Company are as follows:

36,557

461,589

14,761

5,536

119,390

637,833

599,163

484,572

339

759,001

48,076

862,742

2,753,893

2015 2014 2015 2014 2014

Managerial remuneration

House rent allowance

Medical expenses

Number of persons

4,500

1,800

200 6,500

1

3,121

1,270

141

4,532

1

3,600

1,440

160 5,200

1

4,659

1,849

205 6,713

2

66,951

30,128

3,347 100,426

56

43.1

Chief Executive Directors Executives

------------------------------------------- (Rupees in thousand) -------------------------------------------

The Company also provides the Chief Executive and some of the Directors and Executives with

2015

71,999

29,037

3,226 104,262

59

AN

NU

AL R

EP

OR

T

63

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Company maintained cars and mobile phones in accordance with their terms of employment.

44 CAPACITY AND PRODUCTION

2015 2014 2015 2014

Caustic soda liquid

Caustic soda flakes

Liquid Chlorine

Hydrochloric acid

Sodium hypochlorite

Bleaching earth

Zinc sulphate

Chlorinated parafin wax

Silphuric acid

Calcium Chloride Prills

Humic Acid

150,550

10,000

13,200

150,000

49,500

3,300

600

3,000

3,300

20,000

120

125,550

10,000

13,200

150,000

49,500

3,300

600

3,000

3,300

20,000

120

57,268

1,810

7,915

113,165

19,180

-

79

-

803

13,574

14

59,673

4,367

7,997

123,328

19,490

107

57

-

290

14,046

62

Installed capacity Actual productionReason for shortfallTonnes Tonnes

Cautious productionstrategy based onactual demands.

2014201545 NUMBER OF EMPLOYEES

Number of employees at June 30,

Permanent 469

Contractual 213

Average number of employees during the year

Permanent 440

Contractual 255

46 CAPITAL RISK MANAGEMENT

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital, which the Company defines as net profit after taxation divided by total shareholders' equity. The Board of Directors also monitor the level of dividend to ordinary shareholders. There were no changes to the Company's approach to capital management during the year and the Company is not subject to externally imposed capital requirements.

47 NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE

The Board of Directors of the Company in its meeting held on August 28, 2015 has recommended final cash dividend for the year ended June 30, 2015 at 10% i.e. Re. 1 per share (2014: 10% i.e. Re. 1 per share) and decided to offer 15 million (15,000,000) ordinary Right shares at Rs. 20 (including premium of Rs. 10/- per share) to existing shareholders i.e. in proportion of 30 Right shares for every 100 ordinary shares held.

48 DATE OF AUTHORIZATION OF ISSUE

These financial statements were authorized for issue on August 28, 2015 by the Board of Directors of the Company.

49 GENERAL

49.1 Figures have been rounded off to the nearest rupees in thousand unless stated otherwise.

49.2 Corresponding figures have been re-arranged and re-classified, wherever necessary, for the purpose of comparison, the effect of which is not material.

458

201

464

207

DIRECTORCHIEF EXECUTIVE

AN

NU

AL R

EP

OR

T

64

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

No. ofShareholders

ShareholdingsFrom To

TotalShares held

Pattern of Shareholdingas at June 30, 2015

999996

1554722

811

841352211112711111411111111232121111111111111111111111111111

630

1101501

1,0015,001

10,00115,00120,00125,00130,00135,00140,00145,00150,00155,00160,00165,00175,00185,00190,00195,001

100,001105,001130,001160,001165,001195,001200,001225,001240,001245,001265,001275,001290,001295,001340,001345,001355,001360,001385,001390,001395,001410,001480,001485,001490,001520,001540,001545,001550,001580,001635,001670,001715,001730,001770,001780,001805,001

1,175,0011,400,0011,865,0011,900,0012,390,0012,745,0012,990,0013,355,0014,045,0016,600,001

100500

1,0005,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,00080,00090,00095,000

100,000105,000110,000135,000165,000170,000200,000205,000230,000245,000250,000270,000280,000295,000300,000345,000350,000360,000365,000390,000395,000400,000415,000485,000490,000495,000525,000545,000550,000555,000585,000640,000675,000720,000735,000775,000785,000810,000

1,180,0001,405,0001,870,0001,905,0002,395,0002,750,0002,995,0003,360,0004,050,0006,605,000

1,63943,59191,678

431,709381,218302,977140,874264,388223,551136,000

35,551134,666246,000102,335115,500

65,00068,75079,44487,977

185,500700,000104,500108,333131,500163,000168,500797,000203,000229,898245,000250,000269,500276,333295,000299,500685,276

1,045,655717,000362,500777,826394,000399,611410,206484,493485,551494,000521,320542,888548,555552,333584,000640,000671,777716,666730,111770,388783,611805,555

1,175,9301,402,7771,869,2771,900,6662,394,0002,748,0002,994,0003,359,2724,049,3446,604,000

50,000,000

AN

NU

AL R

EP

OR

T

65

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Directors, Chief Executive Officers, 9 13,785,498 27.5710%

and their spouse and minor children

Associated Companies, - 0 0.0000%

undertakings and related parties.

NIT and ICP - 0 0.0000%

Banks Development - 0 0.0000%

Financial Institutions, Non

Banking Financial Institutions.

Insurance Companies - 0 0.0000%

Modarabas and Mutual Funds 4 1,135,500 2.2710%

General Public

a. Local 601 29,344,238 58.6885%

B. Foreign 0 0.0000%

Others (to be specified)

1- Joint Stock Companies 9 5,331,764 10.6635%

2- Pension Funds 4 336,000 0.6720%

3- Others 3 67,000 0.1340%

Share holders holding 10% or more 1 6,704,000 13.4080%

630 50,000,000 100.0000%

Pattern of Shareholding

Number ofShares held

PercentageCategories of Shareholders

as at June 30, 2015

AN

NU

AL R

EP

OR

T

66

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Number ofShareholder

Associated Companies, Undertakings and Related Parties (Name Wise Detail): - -

Mutual Funds (Name Wise Detail) - -

1 CDC - TRUSTEE ASKARI ASSET ALLOCATION FUND (CDC) 250,000 0.5000%

2 CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND (CDC) 357,500 0.7150%

3 CDC - TRUSTEE NAFA ISLAMIC STOCK FUND (CDC) 359,500 0.7190%

4 CDC - TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND (CDC) 168,500 0.3370%

Directors and their Spouse and Minor Children (Name Wise Detail):

1 MR. ABDUL GHAFOOR 640,000 1.2800%

2 MR. ABDUL SATTAR KHATRI 2,994,000 5.9880%

3 MR. WAQAS SIDDIQ KHATRI 344,999 0.6900%

4 MRS. FARHANA ABDUL SATTAR KHATRI 552,333 1.1047%

5 MR. MUHAMMAD SIDDIQ 6,704,000 13.4080%

6 MR. AHMED MUSTAFA 1,900,666 3.8013%

7 MR. PERVAIZ AHMAD KHAN 500 0.0010%

8 MRS. SABINA W/O MUHAMMAD SIDDIQ 255,000 0.5100%

9 MRS. FAREEDA W/O ABDUL GHAFOOR 394,000 0.7880%

Executives: 44,666 0.0893%

Public Sector Companies & Corporations: - -

Banks, Development Finance Institutions, Non Banking Finance 336,000 0.6720%

Companies, Insurance Companies, Takaful, Modarabas and Pension Funds:

Shareholders holding five percent or more voting intrest in the listed company (Name Wise Detail)

1 MR. MUHAMMAD SIDDIQ 6,704,000 13.4080%

2 MR. SHAHZAD YOUSUF KHARTI 4,074,895 8.1498%

3 MR. ABDUL SATTAR KHATRI 2,994,000 5.9880%

4 CHEMITEX INDUSTRIES LTD. 2,748,000 5.4960%

5 ABDUL AZIZ KHATRI 2,667,998 5.3360%

6 MR. YOUSUF KHATRI 3,708,983 7.4180%

Number ofShares held

Percentage

as at June 30, 2015

Pattern of Shareholding

Shareholders’ Categories

AN

NU

AL R

EP

OR

T

67

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

All trades in the shares of the listed company, carried out by its Directors, Executives and their

spouses and minor children shall also be disclosed:

S. No. NAME Shares Gifted

From To

1 MR. WAQAS SIDDIQ KHATRI - 283,888

2 MR. MUHAMMAD SIDDIQ 38,888 -

3 MRS. SABINA W/O MUHAMMAD SIDDIQ 245,000 -

Additional Information

Categories of shareholders required under Code of Corporate Governance (CCG)

AN

NU

AL R

EP

OR

T

68

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

Jamapunji is a landmark initiativeof Securities and Exchange Commissionof Pakistan for investor Education

I/We_________________________________________________________________________________________of

__________________________________________________ being a member of ITTEHAD CHEMICALS LIMITED

and holder of ____________________________________________ Ordinary Shares as per Register Folio / CDC

Participant I.D. No. & CDC Account No. ______________________________________________ hereby appoint

Mr./Mrs./Miss. _________________________________________________ of ______________________ or failing

him / her Mr./Mrs./Miss. __________________________________________ of ______________________ who is

also a member of the ITTEHAD CHEMICALS LIMITED vide Registered Folio / CDC Participant I.D. No. & CDC

thAccount No. ___________________ as my proxy to vote for me and on my behalf at the 24 Annual General

Meeting of the Company to be held on Wednesday, October 21, 2015 at 11.00 a.m. At the Registered Office and

at any adjournment thereof.

Signature this ____________ day of __________ .

_____________________________

Signature: _____________________________

Name: _____________________________

Address: _____________________________

_____________________________

CNIC or _____________________________

Passport # _____________________________

Signature: _____________________________

Name: _____________________________

Address: _____________________________

_____________________________

CNIC or _____________________________

Passport # _____________________________

This proxy form, duly completed and signed, must be received at the Registered Office of the company not less than 48 hours before the time of holding the Meeting.

No person shall act as Proxy unless he/she himself / herself is a Shareholder of the Company except that a company may appoint a person as its representative who is not a shareholder.

WITNESSES:

1.

2.

Note:

Form of Proxy

Signature(As registered with the company)

Revenuestamp(s) ofRupees five

AN

NU

AL R

EP

OR

T

69

20

15

ITT

EH

AD

CH

EM

ICA

LS

LIM

ITE

D

TR

AD

E J

UN

CT

ION

030

0-94

8233

6

ITTEHADG R O U P www.ittehadchemicals.com

Registered/Head Office:

Factory:

39-Empress Road, Lahore-Pakistan. Tel: +92 42 3630 6586-88, Fax: +92 42 3636 5697

G.T. Road, Kala Shah Kaku, District Sheikhupura-Pakistan. Tel: +92 42 3795 0222-25, Fax: +92 42 3795 0206

A U S T R I AH E L L A S

EN ISO 9001/2008 EN ISO 14001/2004

A U S T R I AH E L L A S Ms Certification

No of Certificate 236

TNA OR IE NT LNI

A

MCUC RR OE FD NTI TIOA

IAF